On this overcast August morning shares in solar power firm PV Crystalox (LON:PVCS) were a shining light on the London Stock Exchange market, rising over 12 per cent in early deals after it revealed a strong first half performance.
The Abingdon headquartered firm, which the manufactures photovoltaic silicon wafers that are used in solar powered devices, increased volumes by 23 per cent in the six months ended June 30 2011.
Revenues were up 16 per cent at €129.6 million, compared to €111.7 million in the same period. Earnings (EBIT) increased by 161 per cent to €24.3 million, compared to €9.3 million in the first half of last year. At the end of the period PV Crystalox had a net cash position of €41.3 million.
"Our performance in the first half underlined the progress we have been making in recent years to diversify our customer base and to reduce our costs,” said chief executive Dr Iain Dorrity.
“Despite significantly reduced global market demand, we have increased shipments and delivered a strong improvement in profitability.”
The company highlighted that it has an increasingly diverse geographical customer base, including major photovoltaic (PV) companies.
Operationally PV Crystalox noted that it has reduced average wafer production cost by 10 per cent, and in the second half it expects the Bitterfeld facility, in Germany, to achieve nameplate production capability.
That said, the group also expects tougher pricing conditions in the coming months. Dr Dorrity said: “Looking ahead, industry volumes are expected to pick up in the second half but the pricing pressure seen recently is persisting and we are currently operating below breakeven.
“We are taking measures to counteract these difficult conditions and we are hopeful that developments in a number of markets will lead to increased demand and more favourable trading conditions in the medium term."
In a note to clients Simon Miller, analyst at Northland Capital, also emphasised that PV Crystalox is in a tough market.
“PV Crystalox produced a strong set of first half numbers and increased shipments and profitability despite much reduced global demand,” the analyst said.
Miller added: “Although the company is broadening its geographical customer base and continuing to drive down costs the market it operates in continues to be a tough one.
“The decision not to declare a dividend would also support the view that earnings are likely to continue to come under pressure.”
At 9:30 PV Crystalox shares were up 1.75p, about 9 per cent, changing hands at 21.5p each.