Meyer Burger Technology Ltd - 1st half year 2011excellent results

EBITDA in the first half of 2011 reached CHF 154.9 million, corresponding to a margin of 26.9% (H1 2010: EBITDA of CHF 64.6 million and a margin of 18.1%). At EBIT level, Meyer Burger generated a profit of CHF 125.1 million and an EBIT margin of 21.8% (H1 2010: EBIT of CHF 34.4 million, EBIT margin of 9.6%). Group earnings for the first half of 2011 came to CHF 76.6 million compared with CHF 23.6 million in the same period last year.

Meyer Burger is adjusting its guidance for full year 2011 and expects, excluding the pro-rata results of Roth & Rau AG, net sales for the entire year of CHF 1,200 million as previously communicated. In terms of EBITDA, the Company increases its margin guidance for the entire year 2011 to between 23 to 25%. This outlook is still based on the assumption that customers will realise their expansion projects as planned.

Meyer Burger Technology Ltd (SIX Swiss Exchange: MBTN) achieved once again excellent results in the first half of 2011. The increase in net sales by 61% to CHF 575.0 million clearly demonstrates the Group’s excellent market position in the photovoltaics industry. With this achievement in net sales, the Company is also on track to reach its ambitious full year sales target of CHF 1,200 million. Meyer Burger is an innovative, well financed and profitable technology group that will – also in future – continue to sustainably profit from the growth potential of its markets.

Growing dynamically
The economic environment during the first half of 2011 was marked by strong turbulences in the US Dollar and Euro exchange rates and by fiscal policy problems in various European countries. In the photovoltaics market, the discussions at the end of 2010 about cuts in feed- in tariffs (e.g. in Germany, Italy, Spain) led to uncertainties in the market and accelerated the consolidation process that Meyer Burger had expected to see among solar cell manufacturers and suppliers. However, global interest in solar energy and specifically in photovoltaics has risen considerably.

In this challenging environment, Meyer Burger achieved a total volume of CHF 787.6 million in new orders (H1 2010: CHF 590.1 million). The order backlog as of 30 June 2011 amounted to CHF 1,240.8 million, which provides an excellent basis for the further business performance during the second half of 2011 and for the year 2012.

Net sales increased by 61% to CHF 575.0 million in the first half of 2011 compared with CHF 356.9 million in the same period last year. The increase in net sales is solely due to organic growth. Adjusted for negative foreign exchange rate effects caused by the weak US Dollar and Euro, net sales actually grew by 66% at constant exchange rates. Asia continued to be the most important sales region in the first half of 2011, accounting for 77% of net sales (sales growth +76%; percentage of sales in H1 2010: 71%). Europe generated 21% of net sales (sales growth +53%; percentage of sales in H1 2010: 22%) and the USA accounted for 2% of net sales (change in sales -54%; percentage of sales in H1 2010: 7%).

Attractive profit margins
Gross profit almost doubled again in the first half of 2011 to CHF 306.5 million compared with CHF 164.9 million for the same period last year. The gross margin improved to 53.3% compared with 46.2% in the first half of 2010. The gross margin is also slightly exceeding the already high level in margin that was achieved during the second half of 2010 (52.0%). The increase in margin compared to the first half of 2010 is mainly due to continued high production volumes at the manufacturing sites in Thun and Zülpich, consistent continuation of the modularisation and leverage on fixed production costs, in addition to certain foreign exchange rate effects (Euro), process optimisation in a number of areas and changes in the product mix.

Personnel expenses increased to CHF 82.5 million in the first half of 2011 compared with CHF 62.4 million in the previous year period. As of 30 June 2011, the Group employed 1,530 people on a full-time basis, an increase of 20% compared with year-end 2010 and 36% compared to 30 June 2010, respectively. In addition, the Group employed 223 FTEs on a temporary basis (170 temporary FTEs as of 30 June 2010). The number of temporary employees was reduced by approximately 13% compared to year-end 2010.

Other operating expenses rose to CHF 69.1 million compared with CHF 37.9 million in the first half of 2010. This increase is primarily attributable to volume-related higher transportation costs, increased external R&D expenses, higher IT expenses and costs arising from the expansion of the Group.

EBITDA reached CHF 154.9 million in the first half of 2011, corresponding to a margin of 26.9% compared to CHF 64.6 million and a margin of 18.1% in the same period last year. Depreciation and amortisation amounted to CHF 29.8 million (H1 2010: CHF 30.2 million). Out of this amount, CHF 23.7 million was attributable to amortisation of intangible assets, mainly in conjunction with the M&A activities of the previous years.

At EBIT level, Meyer Burger generated a profit of CHF 125.1 million compared with CHF 34.4 million in the first half of 2010. The EBIT margin reached 21.8% compared with 9.6% in the corresponding period of last year.

The persistent weakness of the Euro and the US Dollar against the Swiss Franc (Euro -3.8%, USD -11.4%) once more led to a lower valuation of the intercompany loans made by Meyer Burger Technology Ltd and MB Wafertec (Meyer Burger Ltd, Thun) to foreign subsidiaries as of the balance sheet date 30 June 2011. The financial expenses of CHF 34.2 million include unrealised exchange rate losses of CHF 29.8 million in conjunction with these intercompany loans and other balance sheet assets in Euros and US Dollars. Income taxes for the first half of 2011 came to a total of CHF 15.3 million, and a corresponding tax rate of about 16.7%. The relatively low tax rate is mainly a result of the tax relief granted to MB Wafertec retrospectively since 2008.

Earnings amounted to CHF 76.6 million compared with CHF 23.6 million in the first half of 2010. This corresponds to earnings per share for the first half of 2011 of CHF 1.63 (diluted) compared with CHF 0.54 for the same period last year.

High cash flows
The Group generated an operating cash flow of CHF +178.5 million in the first half of 2011 compared with CHF +84.1 million in the same period last year. The strong cash flow is due primarily to high volumes of sales, higher margins and a further reduction in net working capital.

Free cash flow (cash flow from operating activities less cash flow from investing activities) was CHF 83.6 million in the first half of 2011. Investments in property, plant and equipment amounted to CHF 24.5 million net for the reporting period and the cash investment in associated companies (Roth & Rau AG) was CHF 69.4 million.

Solid balance sheet structure
Mainly due to the flourishing business development and the business combination achieved in stages of Roth & Rau AG, total assets grew by about 22% to CHF 1,302.8 million, compared to year-end 2010. Cash and cash equivalents as of 30 June 2011 were CHF 479.1 million. Equity increased by 18% to CHF 760.5 million, which corresponds to an equity ratio of 58.4%.

Successful acquisition of Roth & Rau AG
Meyer Burger made another major step in its long-term corporate strategy during the first half of 2011 by launching a public tender offer for Roth & Rau AG in April 2011. As of balance sheet date 30 June 2011, Meyer Burger held a participation of 24.99% in Roth & Rau AG, which is reflected in the Group’s balance sheet as investment in associated companies, in accordance with IFRS. The settlement and payment of the offer price of EUR 22 per share took place on 9 August 2011. As of this date, Meyer Burger Group holds a total of 82.57% of the share capital and voting rights of Roth & Rau AG. The total amount of the investment in this acquisition up to 9 August 2011 came to approximately CHF 318 million. Roth & Rau is fully consolidated in the financial statements of Meyer Burger Technology Ltd since August 2011.

Outlook
With its broad product portfolio in wafering, solar cells and solar modules, Meyer Burger Group fulfils the needs of its customers to simplify and harmonise production processes and to achieve additional significant cost reductions and efficiency improvements through cutting- edge technology. The Company therefore places high priority in a fast integration of Roth & Rau into Meyer Burger Group during the next 18 to 24 months.

For the full year 2011, Meyer Burger expects, excluding pro-rata results of Roth & Rau AG, net sales for the entire year of CHF 1,200 million as previously communicated. In terms of EBITDA, the Company increases its margin guidance for the entire year 2011 to between 23 to 25%. This outlook is still based on the assumption that customers will realise their expansion projects as planned. Regarding business expectations of Roth & Rau AG, Meyer Burger refers to the statements that were made by Roth & Rau itself.

Contact
Meyer Burger Technology AG Grabenstrasse 25 6340 Baar Tel. 041 761 80 00 Fax 041 763 08 08 mbinfo@meyerburger.com