Meyer Burger Announces Fiscal Year 2018 Results; Re-sized Executive Board

Meyer Burger Technology Ltd and Oxford Photovoltaics Limited have entered into a strategic partnership and signed an exclusive cooperation agreement to jointly accelerate the development of mass production technology for perovskite on silicon Heterojunction (HJT) tandem cells.
 
Oxford PV was founded in 2010 as a spin-out from University of Oxford in England. They have developed perovskite tandem solar cells using bottom cells of crystalline silicon and achieved a certified world-record efficiency of 28% in 2018. Such tandem devices use the higher energy blue part of the solar spectrum more effectively, allowing a theoretical efficiency limit of 43% compared to 29% for traditional single-junction silicon-based solar cells.
 
Perovskite tandem solar cells are viewed in the solar industry as the next generation in solar cell technology enabling the reduction of the cost of solar energy (LCOE) to unprecedented levels. Oxford PV is regarded as a leading global company for perovskite tandem solar cells. Its technology and material know-how is protected by a patent portfolio of more than 200 patents.
 
In order to accelerate the industrialization of this promising technology, Meyer Burger and Oxford PV agreed to combine Meyer Burger’s leading Heterojunction (HJT) and SmartWire Connection (SWCTTM) technology with Oxford PV’s perovskite solar cell technology. Meyer Burger will sell a 200 MW HJT line for the pilot production of tandem cells, which will be ramped up by the end of 2020 in Oxford PV’s Brandenburg an der Havel facility. The initial tandem solar cell efficiency target for the 200 MW pilot production line will be 27%.
 
The characteristics of Meyer Burger’s HJT cells make them the perfect bottom cells for Oxford PV’s perovskite top cell layers. Meyer Burger’s SWCT is the ideal technology, connecting the new perovskite on HJT tandem cells into reliable and highly efficient solar modules. Meyer Burger will also develop equipment to industrialize the mass production of the respective perovskite layers which are deposited onto HJT bottom cells. This further accelerates the time-to-market and enlarges Oxford PV’s and Meyer Burger’s advantage as perovskite and HJT technology leaders in the global solar industry.
 
To underscore this strategic partnership, Meyer Burger will take a stake in Oxford PV of up to 18.8% of capital through the issue of up to 62.29 million new Meyer Burger registered shares from the company’s existing authorized capital (up to 9.99% of the currently listed share capital of Meyer Burger). As a result, Meyer Burger will become the largest shareholder of Oxford PV.
 
Furthermore, Meyer Burger was granted the option to increase its shareholding in the course of the joint development agreement at the same valuation price to 31.6% of capital and 24.0% of voting rights in Oxford PV. As strategic investor, Meyer Burger will be granted special corporate governance rights and Hans Brändle, Meyer Burger CEO, will become member of the Board of Directors of Oxford PV.
 
The closing of the transaction is expected by the end of April 2019.
 
Fiscal Year 2018 Results
 
For the PV manufacturing industry, 2018 turned out to be a challenging year. It started in January 2018 with the announcement by the US president that steep tariffs on imported solar panels would be introduced, followed by an intensifying trade dispute between the US and China which affected many companies and industries worldwide.
 
Furthermore, on May 31, 2018, the Chinese government announced substantial subsidy cuts in the solar industry. Despite the positive long-term outlook for the solar industry, these facts have created a lot of uncertainties and led to a significant reluctance by customers to invest in PV manufacturing equipment. The market started to show signs of recovery towards the end of the year.
  
Against the background of the political environment and the margin pressure seen for standard PV business solutions, Meyer Burger achieved incoming orders of CHF 326.8 million in 2018 (2017: CHF 560.7 million). Larger orders in 2018 represented CHF 122 million (including a CHF 74 million Heterojunction/SWCT order in December 2018) compared to CHF 243 million in the previous year (also including a CHF 45 million Heterojunction order in October 2017). The total order backlog as at Dec. 31, 2018 stood at CHF 240.5 million (31.12.2017: CHF 343.8 million).
 
Net sales reached CHF 407.0 million (2017: CHF 473.3 million). Compared to the previous year, the divestment of the Solar Systems business to 3S Solar Plus AG in June 2018 had a negative effect of about CHF 10.2 million, compensated by positive currency effects (mainly EUR) of MCHF 15.2 million. On a comparable basis, the continuing business declined by CHF 71.3 million or 15% in 2018.
 
Operating income after costs of products and services reached CHF 200.8 million (2017: CHF 194.8 million), reflecting a margin of 49.3% (2017: 41.2%).
  
EBITDA reached CHF 26.1 million in fiscal year 2018 (2017: CHF 12.4 million), resulting in an EBITDA margin of 6.4% (2017: margin of 2.6%).
  
In line with the company’s strategic focus on cell/module technologies, the Executive Board will be re-sized from five to four members. Daniel Lippuner, COO, will leave the Executive Board by the end of June 2019. The Board of Directors and the Executive Board would like to thank Lippuner for his achievements and contributions as well as his strong commitment to Meyer Burger and wish him all the best for his future.
 
Outlook for 2019
 
It is difficult to predict 2019, due to political uncertainties, such as trade tariffs, energy policies and new Chinese subsidy policies which have not yet been released. The signed divestment of the wafering business is expected to close within weeks and generates CHF 50 million proceeds.
 
Meyer Burger remains confident in relation to the development of the heterojunction and SmartWire Connection equipment business, which has been further validated by the order from and joint roadmap development with top-tier PV player REC Group, the cooperation with Oxford PV and the substantially increasing sales pipeline for HJT over the past months.
 
Meyer Burger also sees the accelerating market interest in TOPCon as the next upgrade technology beyond PERC. Since its breakthrough at the end of 2018, Meyer Burger is experiencing increased customer interest in its CAiA as the proprietary solution for TOPCon. On the back of China’s anticipated new energy policies and demand from outside China, management expects 2019 to be the inflection point for these new technologies with attractive gross margins starting to replace PERC.