Conergy Improves Further in Q2; REC Wafer Goes Bankrupt

This turnaround is attributed to successful restructuring that the business has gone through over a period of five quarters.

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The Germany-based solar developer and solar module maker company Conergy AG (ETR: CGYK) has improved on its first quarter results and has reported a positive EBITDA for Q2 2012 of $0.62M after about one-and-a-half years. The business earned $179M in the second quarter from module sales of 110MW that also generated net cash flows of $8.6M. The company reported a loss of $6.9M in the second quarter, improving from their Q2 2011 loss of $23M. The gross profit margin was 15.5%, decreasing from last year’s 19.1%.

The shares went up by 5.7% to $0.62 per share, which increased the value of the company to $99M. Conergy CEO Philip Comberg said, “We continue to work hard on bringing Conergy back on track and the results are an important milestone on our way.”

Compared to Q2 2011, the revenues have actually fallen by $98M from $277.6M, but unlike the current quarter, back then, the company earned a negative EBITDA of $7.27M. Shipments have also fallen slightly from 119MW in Q2 2011 to the current 110MW, but the positive EBITDA has reduced the first six-month loss to $8.75M, an improvement from a H1 2011 EBITDA of -$20.8M.

This turnaround is attributed to successful restructuring that the business has gone through over a period of five quarters. It sold its PV inverter operations to Robert Bosch GmbH and closed down the Frankfurt production facility. Mr. Comberg asserted, “[Conergy’s performance] clearly shows that our strategic realignment and improved cost structures yield results.”

The business has earned 79% ($141.7M) of its revenues from outside Germany, while US sales grew by 41%, Greece by 20% and Italy by 35%. In the “Asia Pacific and America” region the company’s sales have witnessed a steep decline from $94M in Q2 2011 to the current $39.6M. This was attributed to tough competition, particularly in Australia. Due to continuous price decline, the full-year revenues for 2012 are expected to be lower than 2011. The company competes what is becoming increasingly crowded space of EPC solar projects, including Canadian Solar Inc. (NASDAQ:CSIQ) and China Sunergy Co Ltd (NASDAQ:CSUN)

In another development, Oslo-based Renewable Energy Corporation (STO:RECO) has decided to shut down its subsidiary, REC Wafer Norway AS, through bankruptcy after the parent company said that it cannot support a solvent windup. The business’s other two units, REC Silicon and REC Solar, will continue with their normal operations.

The company has said that the decision was made after “taking into consideration the overall financial situation of the REC Group and the interests of its stakeholders.” REC Wafer’s net assets, as of July, were -$203M. The bankruptcy will come at an additional cost of $67M, although this figure could change depending upon the valuation of the business’s assets.

 REC Group had reported a complete closure of its European wafer capacity in April this year. The focus from now onwards will be entirely on the Singapore PV plant and the US polysilicon production plants. It had recently signed a bank agreement that came into effect 10^th August in which REC Wafer did not act as guarantor.