“TRADE” Segment

Sales markets picking up globally. Companies with strong brands and sound distribution structures were better equipped to withstand the price pressure emerging during the period under review. In the framework of market consolidation, SolarWorld held its own well thanks to its strategic positioning and its size. Strategy and action It also benefited from dynamic international demand, although revenues and earnings reflected the pressure on margins.  Earnings, situation Although demand was still subdued at the beginning of the year due to the economic situation and the hard winter, the second half of the year saw a strong rise in demand due to price reductions driven by an intensification of competition. This trend was additionally boosted by the debate about the declining feed-in tariff structure in Germany, our main sales market, so that we recorded demand hikes and a year-end rally. This boom placed major challenges on our Logistics and Sales departments. Nevertheless, we managed to serve our customers and strongly increase sales of modules and kits in the period under review.

Germany remained our strongest sales market. Driven by strong demand in the second half of 2009, we more than doubled the volumes of modules and kits sold. Our long-standing customer relations with electrical and solar wholesalers provided us with a competitive edge in this respect.

In the period under review, Italy became our second most important sales market. We achieved double-digit sales growth in this country.

In France and Belgium we tripled our sales in the year under review. These young markets with market volumes of less than 300 MW each are still relatively small compared with Germany (3,060 MW), and Italy (374 MW), but offer enormous potential for the future. We mainly sold our solutions for integrated roof plants (Energyroof^®) and our complete kits (Sunkits^®) in these countries. In order to improve the quality of our service in the French-speaking regions, we set up a liaison office in Grenoble, France, in the year under review. Legal group structure changed

The US solar market fell short of expectations in 2009. Demand was impacted – considerably more strongly than in Europe – by the financial uncertainty arising from the financial crisis. The measures to promote solar energy announced by the US Administration were not defined in greater detail until the third quarter. They therefore did not have a major impact on demand in the year under review. The solar power market In line with these overall conditions, our sales in this market fell short of the level generated in the previous year. We expect the US market to pick up as of 2010. Thanks to stronger marketing measures and the expansion of our sales activities, we will benefit from this development

Since 2009, all trading activities in South Korea have been handled by our local joint venture, SolarWorld Korea Ltd. so that they were no longer included in the “Trade” segment in the year under review. In the previous year, sales in South Korea accounted for around 12 per cent of total sales abroad for modules and kits in this segment.

Due to above-proportionate growth of the German market and the strong decline of the Spanish market, our share of foreign sales in the “Trade” segment declined to 17 (previous year: 53) per cent.

Apart from our main business with roof-mounted systems, we again demonstrated our competency in large-scale plants, ranging from our pure module business all the way to the development of complete solutions for large buildings and free-field installations. The order book for turn-key projects totaled € 86.1 million (previous year: € 11.2m). This volume, for which SolarWorld operated as general contractor, was almost exclusively handled in cooperation with the Solarparc Group, which implemented the design and marketing of the large-scale projects. In addition, we engaged in normal delivery business, shipping SolarWorld modules to large-scale projects, which is reflected in the “Trade” segment – as is the turn-key business.

Sales strategy proves its worth. One of our strengths in 2009 was SolarWorld’s good standing among our specialist partners and customers. In Germany and the USA we have maintained well-established distribution networks for 10 and 30 years, respectively. Our distribution strategy is based on incorporating our customers in our growth – supplying volumes in line with market demand as quickly as possible and offering promotional material to our specialist partners as brand suppliers in order to support their sales. Brand investments stepped up – demand effects for our group and our customers Our direct customers are wholesalers and retailers through whom we supply to installers who, in turn, sell our modules and kits to end customers. This distribution strategy has proven to be the right one: SolarWorld can rely on a large network of well-trained specialist partners. This is a major advantage in a market characterized by volatile demand such as the solar market, securing sufficient short-term installation capacity even in times of demand hikes in order to place our products on the market.

In order to secure this advantage for the future, we expanded our specialist partner program in 2009. Our specialist partners can order brochures, give-aways and promotional material via our exclusive FachpartnerNet and individualize selected products with the company logo and address. The new offers were well received and viewed positively by our German specialist partners. Thus, our annual customer survey showed that the majority were “very satisfied” and “satisfied” with the provision of the advertising materials, sales ads and presentation utensils.

In order to expand and consolidate the network with US contractors, we launched the “SolarWorld’s Sunkits^® Program” in 2009 – a training program teaching basic knowledge about Sunkits^® in a two-day workshop and thus facilitating market access to our contractors.

Majority of customers rates service quality as good. The satisfaction of our customers is a crucial performance indicator of our business activity. Corporate management and control The annual international survey on customer satisfaction among our module and kit customers for the year 2009 showed a satisfactory result: With a good redemption rate of 35 per cent 85.4 per cent of our customers said they were “very satisfied” or “satisfied” with SolarWorld. This indicator was identified in this form for the first time in the year 2009. Comparable figures will come to hand in the following year. While 87.6 per cent of our customers gave the criterion of “service” a rating of “very good” and “good”. The rating of “very good” and “good” for the quality of our products given by 99.8 per cent of respondents confirmed our quality positioning. Based on these results the strengths and weaknesses are analyzed and the products and services are continuously optimized. Thus, individual parameters in the area of service indicated that customers were less satisfied than only a year ago. This result is mainly attributable to high demand peaks in the German market towards the end of the year under review, which confronted both our Sales and our Logistics Departments with major challenges. We instantly responded to this development initiating an analysis in the area of Quality Assurance.

Presence at trade fairs in core markets. With a presence at eleven (previous year: 15) international trade fairs, SolarWorld supported its sales activities in the year under review, developed new customer contacts and strengthened its existing customer base as a wafer, module, and systems supplier as well as a recycling specialist. Our focus was on our core markets of Germany, USA and Europe: SolarWorld presented itself at the year’s main international solar event, the 24th European Photovoltaic Solar Energy Conference and Exhibition, and at Intersolar North America, the largest international trade fair in the USA, the market of the future. We also actively presented ourselves at various trade fairs in major European markets such as Italy, France, or Greece.