Although most pundits agree that 2012 will be a very tough year for the PV majors, some good news has finally started emerging.
The first story is about the price of silicon, the raw material that feeds our industry and is the source of so much opportunity and at times, so much pain.
Although the days of an almost monopolistic strangle-hold seem to be over in the upstream world of silicon refining, the profitability does seem to remain a little skewed.
Despite falling prices, major silicon refiners are reporting recent profits as high as 46%. This is a far cry from the single digit profits – and losses – of the majority of PV module manufacturers.
But they are clearly succumbing to the pressure, with rumours of major processing plant closures in China, and several European plants being mothballed, such as REC’s Norwegian facility.
The good news is that profits upstream are reducing (compared to 2011), which is helping to drive average silicon spot prices down; they have have fallen 22% since January and almost 52% since October 2011. The temptation to absorb this into profit recovery for PV module manufacturers will be strong, but in an effort to stimulate the market we could see some price reductions – or at least low prices holding steady, further down the chain.
So that’s good news for PV prices in 2012, at this stage anyway.
Equally important is the news that SMA, the worlds largest inverter manufacturer has had a bumper start to the year.
In a note to shareholders SMA issued guidance confirming their original full year expectations, and reported a stronger than expected first quarter. As a premium brand, their market share has been under relentless attack from new industry entrants and with global PV forecasts down for 2012, the year was going to be tough.
Despite this, SMA managed to deliver almost double the volume compared to Q1 last year, at just under 2GW and almost tripled the EBIT at 42.8M euro’s. The EBIT margin also improved compared with last year, rising to 10.6% (Q1 2011: 5.4%) and their net cash position helps place them in a healthy position according to their quarterly financial report.
I for one, am really happy to see at least one inverter industry stalwart able to remain profitable and healthy, and a little profit re-distribution opportunity in the upstream PV market.