November 11, 2008

Constance, Germany: Sunways AG Reports Third Quarter Results

Third quarter sales of cell manufacturer, Sunways AG rose by 11 percent to 8.6 million EUR. However, Earnings Before Interest and Tax (EBIT) declined markedly against the comparable prior year period by 70 percent to 0.6 million EUR.

As expected, the result in the third quarter 2008 continued to be affected by the high cost of raw materials as well as by personnel and operational expenses that mainly related to the expansion of the Arnstadt production plant. Net income for the quarter at 0.2 million EUR remained at the prior year level.

In the solar cell segment, Sunways AG generated sales of 19.2 million EUR (prior year: 23.1 million EUR) in the third quarter. EBIT declined from 1.6 million in the third quarter 2007 to 0.7 million EUR in the period under review.

The solar systems and projects segment continued to be a growth vehicle in the past quarter: sales rose by 28 percent against the third quarter 2007 to 49.5 million EUR. EBIT recorded a markedly over-proportionate increase to 1.3 million EUR. Therefore, the prior year segment EBIT of 0.4 million EUR more than tripled.

In the third quarter 2008, international business increased by 65 percent against the prior year quarter. The total international portion of Sunways’ quarterly sales amounted to 18 percent. Compared to the third quarter 2007, the international quota rose by about 6 percentage points. However, due to regulatory uncertainties with respect to the continuation of the Spanish feed in law, the international sales of Sunways declined against the second quarter 2008. Despite the marked rise in sales in our other European core markets Italy and Switzerland, the decline in sales in the Spanish market in the third quarter 2008 could not be offset.

In the first nine months 2008, Sunways achieved sales of 184.4 million EUR. The 22 percent rise in sales against the comparable nine month period in 2007 was fuelled by the over-proportionate growth in the solar systems and projects segment: Compared to the first nine months 2007, the systems business increased by 41 percent to 125.1 million EUR in the 2008 nine month period.

The solar cell segment experienced a weaker development since the beginning of 2008. Sales declined by 4 percent against the first nine months of 2007 to 59.3 million EUR. Consolidated EBIT decreased to 2.2 million EUR between January and September 2008 (prior year period: 3.6 million EUR). Net income at 0.9 million EUR remained stable compared to the prior year period.

To further optimize the supply of materials, Sunways AG entered into a contract with Swiss Wafers AG in October 2008. This contract covers the supply of a total of 115 megawatts of solar wafers during the period from 2009 to 2016. At the end of 2007, Sunways had already concluded a contract with LDK Solar on the supply of a total of 1,000 megawatts of silicon wafers over a 10 year period. First shipments under this contract are expected at the end of 2008/beginning of 2009. With these two raw materials supply contracts and the long term supply contract with Deutsche Solar taking effect as from January 2009, Sunways AG has created the prerequisites for the full supply of raw materials for its expanded 116 megawatt production capacities in Constance and Arnstadt.

Further details about: Sunways AG