Although we dont believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: The share price of PV Crystalox Solar (LSE: PVCS) a leading supplier of photovaltaic (PV) silicon wafers is currently down 12%, following release of its interim results for the first half of 2014. The company reported a first half loss of6.9m, compared with the profit of1.3m that it made in H1 2013.
Net cash fell to35.4m by 30 June 2014, down from39.2m on31 December 2013. However, Crystaloxsays that8.7m willbe received in September 2014, following court approval of a settlement with a customer with whom ithad along-term agreement to supply wafers at prices thatare now considerably above current market level. Two other customers with whomCrystalox had similar agreementshave entered insolvency, butclaims had been registered with the respective administrators.
So What: The loss was attributed to the continuing challenging PV market conditions, and the company also saidthat there was oversupply, due to weaker demand in China during the first half.Crystalox also commented that the resumption of international trade disputes had resulted in prices being driven below industry production cost, with wafer prices falling back tomid-2013 levels.
What Now: Despite the poor results, CEO Iain Dorrity said thatshipment volumes had actually increased group shipments reached 99MW during H1 2014, up 18% on the same period last year and that there were strengthened customer relationships in both Taiwan and Europe.
However, the company saysthat itremains cautious and, given theunfavourable market pricings it will bemaintaining its cash conservation strategy and will restricting production levels to around 30% of operating capacity.
Despite this mornings slump,Crystaloxs share price is still up 21% since the start of 2014, compared with a flat FTSE All-Share. Butthat will be little consolation for longer-term shareholders over the past five yearsCrystaloxs share price has collapsed by over90%, whereas the All-Share index is up 45% over the same period.
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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.