Tough Market Leaves Mark On Roth & Rau Results

The tough market climate in the solar industry clearly left its mark on the sales and earnings performance of Roth & Rau AG in the 2011 financial year. Based on preliminary figures, consolidated sales fell year-on-year from EUR 285 million to EUR 208 million. New orders net of cancellations amounted to EUR 153 million (2010: EUR 537 million). Orders on hand totalled EUR 141 million as of 31 December 2011 (31.12.2010: EUR 336.5 million). At EUR -107 million, earnings before interest and taxes (EBIT) were sharply down on the previous year´s figure of EUR -27.3 million. The high negative earnings figure posted for the 2011 financial year was chiefly due to one-off items of EUR 93 million. This figure included goodwill impairment losses of EUR 18 million recognised for subsidiaries. Write-downs of receivables accounted for a EUR 19 million charge on earnings. Furthermore, write-downs and impairment losses totalling EUR 39 million were recognised on inventories and for property, plant and equipment and intangible assets. Alongside these, as a risk precaution provisions of EUR 12 million were recognised for contractual risks. One-off expenses of EUR 5 million were incurred for the CRiSP cost and structure optimisation programme and for the legal advice in the context of the takeover by Meyer Burger Technology AG. Adjusted for these items, EBIT amounted to EUR -14 million. Consolidated net income dropped to EUR -123 million (2010: EUR -25.8 million).

Due to these negative earnings figures, shareholders´ equity fell from EUR 251 million to EUR 127 million. The equity ratio as of 31.12.2011 remained solid at 53% (31.12.2010: 58%) "“ not least given the substantial curtailing in the balance sheet due to adjustments for one-off items. The Group had cash and cash equivalents of EUR 30 million as of the balance sheet date (31.12.2010: EUR 108 million).

Far-reaching restructuring programme adopted 

The Supervisory Board of Roth & Rau AG has approved the proposal submitted by the Management Board to supplement the actions already taken within the CRiSP cost and structure optimisation programme with additional measures. The aim is to adjust cost structures at short notice in line with the changed market position so as to ensure a rapid and sustainable improvement in the company´s earnings and financial strength. It is planned to close locations and cut significant numbers of personnel. Following the implementation of all measures, of the current total of 26 subsidiaries only 12 companies will remain within the Group. The workforce is to be downsized from 1,350 to less than 1,150 employees.

Simplification of group structure

Roth & Rau`s affiliation within the Meyer Burger Group since 2011 has resulted in synergy potential, especially in the Asian market, in terms of both market and cost structures. In future, local customer support in Asia is to be provided by Meyer Burger`s sales and service companies. Roth & Rau´s subsidiaries and outlets in China, Taiwan, India, Korea and Singapore will therefore be closed. To safeguard the company´s market presence, the sales and service employees will be taken over by Meyer Burger. By merging their sales activities, the companies can pool their competencies and generate personnel and administration cost savings. To further boost the Group`s earnings strength, loss-making subsidiaries are to be discontinued. This measure will affect the production company in Italy and the sales companies in Australia and the USA. In Germany, the complexity of the group structure is to be further reduced by merging companies.

Creation of competitive cost structures

Further components of the restructuring package are aimed at returning the Roth & Rau Group`s costs to competitive levels. At the Hohenstein-Ernstthal location, where around 420 employees currently work, the on going crisis in the solar industry will lead to around 15% of these jobs being cut. The Management Board regrets these measures extremely, but views them as indispensable to ensure the company`s competitiveness in an ever tougher market climate. Furthermore, material and other non-personnel costs will be reviewed across all production companies to generate further cost savings.

All measures are planned to be implemented in full by the end of the first half of 2012. Annual savings of EUR 18 million are expected from 2013. The one-off restructuring expenses are expected to result in a EUR 3 million charge on earnings in 2012. Provided that the underlying framework does not deteriorate even further, the measures initiated will create the conditions necessary for significantly lowering the Group`s breakeven and for returning to sustainably positive earnings.

Financing 

Given the change of control triggered by the majority takeover by Meyer Burger Technology AG, existing guarantee credit lines had to be restructured in line with requirements. Accordingly, the existing syndicate loan agreement for EUR 75 million was terminated by Roth & Rau AG within the respective deadline as of 22 December 2011. Since 23 December 2011, the Roth & Rau Group has had bilateral guarantee credit lines of EUR 42 million made available on attractive terms by Meyer Burger Technology AG via German banks. Furthermore, as of 10 January 2012 Meyer Burger Technology AG also issued a binding letter of comfort in favour of the Roth & Rau Group. This secures the allocation of liquidity by Meyer Burger Technology AG up to a maximum amount of EUR 50 million should the need arise.

Further figures and details will be published with the Annual Report on 22 March 2012.