3W Power, the holding company of AEG Power Solutions recently announced its financial results for 2011. Revenue for the year was up 40.0% at €428.2 million (2010: €306.0 million), while EBITDA reached €53.1 million (2010: loss of €23.9 million) with an EBITDA margin of 12.4%. Order intake was up 9.0% year-on-year albeit slow in Q4 due to delays in solar projects in certain geographic markets and weak demand for power controllers for polysilicon manufacturing. “We are pleased with our performance in 2011”, commented Horst J. Kayser, CEO of AEG Power Solutions. “We reached our revenue target for the year and achieved a double-digit EBITDA margin.”
RES business segment
Renewable Energy Solutions (RES) revenue came to €224.0 million compared to €110.2 million in 2010. RES EBITDA in 2011 came to €68.0 million, compared to €15.2 million in the prior year.In 2011, Power Controllers saw some expansion in non-polysilicon applications such as high-end power systems for sapphire crystal growing equipment and for electrolysis for hydrogen production. Although only a small part of total Power Controller revenue, sales of such “non-poly” applications more than doubled in the year. Sales of power controller modules also continued on an upward trend and were up 34% year-on-year.
Solar sales on aggregate were up 165% in the year with growth coming from Eastern Europe and India where AEG PS booked major projects both in solar inverters and in monitoring systems. Sales in emerging markets helped offset lower-than-anticipated performance in Western Europe, where sovereign debt and concerns over budget deficits held back growth and contributed to economic uncertainty.
The newly introduced Protect PV.500 improved the competitiveness in central inverters and contributed to winning projects in demanding markets such as India. In Bangalore, India, a new 400MW solar inverter facility was officially opened in October 2011 and contributed €6.0 million to solar sales in the fourth quarter.
EES business segment
Year-on-year, EES revenue was up 4% to €204.2 million. EES recorded its third consecutive quarter of positive EBITDA and was EBITDA-positive for the fiscal year, aided by Agenda 2012 measures. EES EBITDA was €5.7 million, compared to 2010 EBITDA of -€16.6 million.
As expected Group Q4 revenues were strong, reaching €125.9 million (2010: €94.9 million), up 33% compared to Q4 2010. RES reached revenue of €66.3 million (2010: €34.7 million) while EES, aided by seasonality effects, recorded its strongest quarter of the year with revenue of €59.6 million (2010: €60.2 million). Group EBITDA in Q4 was €12.5 million. RES profitability in Q4 was still strong with an EBITDA margin of 25.9%, while EES EBITDA margin was 4.4%, the third consecutive positive quarter. Due to the difficult economic situation, Group orders decreased to €79.5 million (2010: €127.7 million), down 38%. Order intake performance in EES was steady in Q4 (€51.4 million in 2011 compared to €51.1 million in 2010) while RES orders fell by 63% to €28.1 million (2010: €76.6 million) due to the factors described earlier.
Group plans for 2012 assume further growth over 2011 due to our positioning in global growth areas. However, AEG PS notes that economic sentiment has worsened over the last six months and order intake momentum in the fourth quarter of 2011 slowed. Although the Group continues to anticipate growth in its key markets, the deterioration in economic conditions, the continuing debt crisis, price pressure in the inverter market and potential overcapacity in polysilicon are impacting profitability for 2012. The overall market development will depend on the resolution of the sovereign debt crisis in the Eurozone and the avoidance of further economic contraction.
Public takeover offer by Andrem Power
On February 21, 2012, Andrem Power S.C.A. (Andrem), a company wholly owned by Nordic Capital Fund VII, announced its decision to make a voluntary public takeover offer for all the outstanding shares of 3W Power at EUR 4.35 per share. Andrem and 3W Power have entered into a transaction agreement, which governs their relationship and 3W Power’s support with regard to the offer. Andrem has also entered into share purchase or tender agreements with certain core shareholders totaling approximately 65% of 3W Power’s voting rights. Under certain circumstances, the above-mentioned shareholders are entitled to terminate these share purchase or tender agreements.
According to the terms of the transaction agreement, the offer will be conditional upon the acquisition by Andrem Power of not less than 95% of the outstanding 3W Power shares (including all 3W Power shares subject to the share purchase or tender agreements), merger control clearance, non-occurrence of a material adverse change of 3W Power’s financial condition and other customary conditions.The offer will be made following approval by the German Federal Financial Supervisory Authority (BaFin) and on, and subject to, the terms and conditions to be set out in the offer document. Under the transaction agreement, 3W Power has agreed to pay Andrem a cost coverage fee of up to EUR 3 million in certain circumstances, including if 3W Power’s Board of Directors changes its recommendation or if the 95% acceptance condition is not met.The closing of the transaction is expected in the second quarter of 2012. After closing, Andrem intends to acquire all the remaining 3W Power shares via a squeeze-out procedure and delist 3W Power.