SolarWorld Focuses On Organic Growth, Not M&A
Date: 03-Feb-10
Country: GERMANY
Author: Christoph Steitz
The company sign of Solarworld AG is pictured at their headquarters in Bonn in this November 19, 2008 file photo. While the the rest of the economy plunges into recession, Germany's solar power industry is full of optimism
Photo: Ina Fassbender
FRANKFURT - SolarWorld said it will focus on organic growth rather than on takeovers, as Germany's biggest solar company by sales braces for a slide in prices for solar components.
"Our main priority is organic growth and takeovers are not on top of our agenda," Chief Financial Officer Philipp Koecke said in an interview on Tuesday. SolarWorld last year unveiled a strategy to expand its solar module capacities at a time when many players in the industry are still grappling with free-falling prices for solar components and tight financing conditions.
SolarWorld, however, has held up rather well, mainly due to its diversified product range, while pure module and cell makers such as Solon and Q-Cells have piled up large losses in the past year.
SolarWorld in early January reported provisional 2009 sales of 1.010 billion euros ($1.41 billion), slightly exceeding its outlook for 1 billion euros.
Chief Executive Frank Asbeck told Reuters at the time that shareholders of the company could expect a 2009 dividend that would not be below the level of 2008, when SolarWorld paid out 0.15 euros per share.
Shares in SolarWorld closed up 1 percent, in line with the FTSE clean tech index of the world's biggest renewable companies.
The solar industry is currently facing tough times in Germany, the world's biggest solar market, with the government proposing to slash incentives for solar power by at least 15 percent from April.
Some analysts argue that this would hit SolarWorld hard due to its large sales exposure to Germany, while others see SolarWorld's brand and international expansion as a way for it to offset any dip in German profits.
According to StarMine, SolarWorld trades at 15.7 times estimated 12-month forward earnings, a premium to Phoenix Solar but at a discount to U.S. First Solar.
The proposed cuts, however, are expected to lead to a surge in demand in the first few months of 2010 as customers want to benefit from the better incentives before they are changed. Koecke said that he also expected demand to improve again by year end after a short dip in summer.
"I see demand (for modules) picking up at the end of the year again, as customers will realize that further cuts in feed-in tariffs will become effective at the beginning of 2011," he said.
The German renewable act sets out an annual decrease in feed-in tariffs -- prices utilities have to pay to generators of solar power.
(Reporting by Christoph Steitz)
