Meyer Burger Technology Ltd (SIX Swiss Exchange: MBTN) announced that it has initiated a company-wide structural programme. The objective of the programme is to extensively strengthen the company’s strategic technology units focussed on high-end photovoltaic user markets and to increase its flexibility in the often challenging high-end key markets. In addition, the global service business will be strengthened and individually expanded within local customer and application markets. As a result of the structural programme, the total operating cost base will further decline by about CHF 50 million.
Meyer Burger has already executed numerous measures during the past five years, reduced its operating expenses, simplified its corporate structure and re-adjusted capacities due to the extremely challenging situation in the solar industry. The level of personnel and other operating expenses declined by over 36% from CHF 330 million in fiscal year 2011 to CHF 210 million in fiscal year 2015.
In the first half of 2016, Meyer Burger achieved a profit at the EBITDA level for the first time since 2012. The positive EBITDA of CHF 6.2 million and the positive cash flow from operating activities of CHF 15.4 million for the first half-year 2016 confirm the direction the company has taken and its resulting turnaround. However, further comprehensive cost reductions will be necessary in order to also enable long-term and sustainable profitability on the net earnings level.
The company’s mid- and long-term objective is to strengthen its strategic technology units focussed on high-end photovoltaic user markets and to increase its flexibility against short-term shifts in the market through industry-leading and manufacturing-proven technologies and products, as well as through an increased local services business.
As a result of the cost-cutting measures which are linked to the structural programme, the annual operating cost base of the company will further decline by about CHF 50 million.
Cost-cutting measures completed until year-end 2016
The organisational and production structures in the Technology and Production Centers will be further optimised and focussed on core technologies. Capacity adjustments will take place in Asia. Research and Development, the worldwide sales and service organisation and certain parts of the product portfolio will be streamlined. All these measures will lead to a very lean company structure focussed on high-end photovoltaic user markets.
As a result of the structural programme, the number of employees will be reduced by about 250 positions or 16% by year-end 2016 compared to mid-year 2016 (1,547 FTE). About one third of the reductions will occur in Switzerland, mainly at the site in Thun. Today in Switzerland the relevant consultation procedures will begin together with the employee representatives. Wherever possible, reductions will be achieved through natural fluctuations or early retirement schemes. However, it will most likely not be possible to avoid terminating employment contracts with many people. Meyer Burger regrets the effects this will have on the people concerned and will do its utmost to make the measures as socially compatible as possible.
The extraordinary expenses in conjunction with the structural programme are expected to be about CHF 3 to 4 million and will be charged as one-off costs to the 2016 financial statements.
“The improvements we achieved during the first half of 2016 in terms of our sales markets but also with respect to our operating results have been very encouraging. However, we must lift our company into sustainable profitability on the net earnings level as well. We want to align Meyer Burger for the future and become leaner, increasingly flexible and even more focussed than before on the high-end user markets in the photovoltaic industry. This unfortunately leads to far-reaching measures within our organisational structure. These decisions are not easy to take. The structural programme creates the conditions for Meyer Burger to increase its operating profitability and to continue benefitting from its strong market position”, says Peter Pauli, CEO of Meyer Burger.