Strategic realignment


Dear Shareholders

The annual result for 2019 is disappointing. Both sales and profit margin in the mainstream business remained unsatisfactory and below expectations. In the 2019 reporting year, Meyer Burger recorded incoming orders amounting to CHF 188.3 million (–24.3% on a like-for-like basis). This reflects the difficult market environment due to increasingly strong Chinese competition and the Chinese government’s goals set out in the “Made in China 2025” strategic plan. Orders on hand as at 31 December 2019 totaled CHF 105.1 million.

Net sales amounted to CHF 262.0 million (–22.1% on a like-for-like basis). EBITDA fell to CHF –13.5 million and the result at the EBIT level stood at CHF –28.6 million. The net loss amounted to CHF –39.7 million. As at 31 December 2019, Meyer Burger had equity of CHF 176.2 million, which corresponded to an equity ratio of 64.1%.

Sustained growth in the solar industry

Renewable energy sources, especially solar energy, will play a vital role in the energy revolution. This means that the solar industry remains an attractive, long-term growth market worldwide; an annual growth rate of around 9% in installed solar panels is anticipated between now and 2050, by which time installed solar capacity would be around 8.5 TW compared to 0.6 TW today, and provide more than 40% of global generation capacity (IRENA, Future of Solar PV, November 2019). Annual investment in solar energy as a whole currently exceeds 100 billion US dollars and is expected to continue growing despite further cost reductions. In the coming years, we anticipate an increase in non-subsidised solar energy installations, geographical diversification and rising competitiveness vis-à-vis conventional energy sources. In particular, the demand for decentralised solar systems will grow at an above-average rate.

The 2020 Global Photovoltaic Demand Forecast (IHS Markit) envisages the installation of 142 GW of additional solar panels this year, corresponding to a growth rate of 14% compared to 2019. While China continues to be the largest producer and purchaser of solar panels despite restructuring its solar market, growth in the end markets outside China, especially in Europe and North America, is expected to be considerably higher. Also in terms of geographical spread, there is going to be substantial growth. In the coming years, we expect the development of further new markets in South-East Asia, Latin America and the Middle East. The importance of markets outside China is thus steadily increasing.

At the present time, China still accounts for around 80% of global production capacity for solar cells and solar modules. This concentration is driven primarily by volumes, economies of scale and the pursuit of market share, as well as local subsidies. The intense competition is putting sustained pressure on selling prices, with the result that many companies lack the cash flow for investment in new technologies.

The current PERC technology has become the industry standard sooner than expected; its market share in production capacity was around 65% end of 2019 and is still growing. Prices for PERC modules reached another low end of 2019, nearly 20% less than 12 months ago. Still, prices for PERC equipment are coming under further pressure due to the intense Chinese competition. The resulting inadequate margins mean that this business is no longer attractive for Meyer Burger.

Whereas PERC modules have become a commodity, Meyer Burger offers a quantum leap in the form of its heterojunction/​SmartWire connection technologies. Our approach enables a substantial increase in cell and module efficiency of up to two percentage points. REC, our strategic customer in Singapore, is demonstrating this with its new Alpha modules. Along with competitive production costs and convincing technical performance data, this opens up opportunities to achieve higher selling prices and thus provides attractive incentives for new investment in this promising technology. We expect heterojunction technology to steadily gain market shares – the VDMA association is projecting a rise from approx. 3% at the present time to 12% in 2026 and 15% by 2029 (VDMA: International Roadmap for Photovoltaic 2019).

Strategic realignment

Against the backdrop of these market dynamics, we resolved, in the reporting year, to undertake a strategic realignment of Meyer Burger. That is to say, we are focusing on the marketing and ongoing development of our own heterojunction/SmartWire connection technologies as well as the highly promising tandem cell technology, a combination of heterojunction and perovskite. We are withdrawing from the low-margin bulk business. As a result of our strategic refocusing, we have sold or restructured companies that no longer form part of our core business, thereby further reducing our fixed cost base and boosting the efficiency of the organisation.

We assume that our own heterojunction/​SmartWire connection technologies give us a head start of several years over our competitors. In order to maintain this lead, we will protect our technologies and the production facilities based on them more strongly and rely on partnerships. Within the framework of partnership agreements, we plan to participate commensurately in the success of utilizing our heterojunction/​SmartWire connection technologies.

2019 milestones

In March 2019, we established a strategic partnership with Oxford PV (Great Britain), the technology leader in the field of high-efficiency crystalline silicon/perovskite tandem solar cells. Perovskite/silicon-based tandem solar cells have been developed using heterojunction technology and promise another significant increase in efficiency. Our investment secures us direct access to this new technology. Working in close cooperation with Oxford PV, we are pressing ahead with the industrialization of perovskite solar cells.

At the end of 2019, REC Group started mass production of its new Alpha modules. This new module generation is being produced on Meyer Burger heterojunction/​SmartWire production lines and is regarded as the most powerful 60-cell solar module in the world with an output of up to 380 Wp. This places the Alpha module among the most efficient solar panels on the market, at 21.7% module efficiency, which is equivalent to 217 watts per square meter and an improvement of 10% compared to mainstream PERC solar panels. All in all, the joint development project with REC progresses better than expected: We are set to achieve the ambitious common objectives, in terms of both panel efficiency and the performance and profitability of the production lines. The successful launch of the Alpha modules is attracting a great deal of attention in the industry and substantiates our optimism.

Changes in the Board of Directors and the Executive Board

The changes at the Board of Directors and Executive Board level announced at the time of publication of the transformation program were completed in the first half of 2019. At the General Meeting on 2 May 2019, Dr Remo Lütolf and Andreas R. Herzog were elected to the Board of Directors as Chairman and Board Member respectively. At the same time, the body was reduced to four persons. The Executive Board, too, was reduced, from five members to three (Dr Hans Brändle, CEO; Manfred Häner, CFO; Dr Gunter Erfurt, CTO).

A message of thanks

The rapid changes in our industry and in our company were challenging for us all in 2019. The Board of Directors and the Executive Board would like to thank each and every employee for their tireless commitment to Meyer Burger. Our thanks also go to our customers, suppliers and business partners for their support.

And to you, our valued shareholders, we would like to express our thanks for your loyalty to Meyer Burger. We are aware that in the past, we have often failed to meet your expectations. We are also aware that we still have much work ahead of us before we reach the profitability threshold again on a sustainable basis. However, we are confident that we will soon achieve this goal thanks to the strategic realignment we have initiated.

Dr Remo Lütolf

Dr Remo Lütolf
Chairman of the Board of Directors

Dr Hans Brändle

Dr Hans Brändle
Chief Executive Officer