SolarWorld AG - Annual Report 2009 - Group management report - Strategy and action

Strategy and action

Strategic financing 2009/2010+

Corporate management and control

MAJOR BUSINESS EVENTS in 2009

Market position maintained. Worldwide we upped our 2009 market share to five (previous year: four) per cent. At the same time we succeeded in reaching our revenue target in spite of the industry-wide drop in prices. Constant cost cutting measures along the individual production stages as well as the procurement situation for major raw materials that was optimized in 2009 have admittedly contributed to a sound result, but were not able to compensate completely for the market-induced price declines. Earnings situation
Strategic focus on brand campaign. Pursuant to our strategy, we increased investments in our brand awareness almost fivefold – to about € 10 million. Brand investments stepped up – demand effects for our group and our customers
Production capacity fully utilized. While many competitors were forced to cut their production and introduce short-time work we increased production to meet the strong demand for SolarWorld products at capacity limit. Effects of general conditions on development in 2009
International production network extended. In line with the market development we placed the investment emphasis in 2009 on the retail business and decided to rapidly expand the group’s module production. In this way we will increase capacities from the current 500 MW to 1,250 MW by the end of 2011. The investments, the financing and the infrastructure expansion were initiated in 2009. At the German location of Freiberg we upped our wafer production as planned from 250 MW to 750 MW. Facts: Worldwide production capacities
Growth financially secured. In order to be able to implement our investment plans, we raised a syndicated credit (€ 200 million) in 2009 and prepared to issue a Eurobond (€ 400 million). We placed this bond successfully on the capital market in January 2010 and as a result, we secured the financial flexibility for further growth right at the beginning of the year. Scheduled investments
Infrastructure created to promote our innovative strength. We strengthened the infrastructure of our international research campus in 2009. The cell and module lab was almost completed and began its development work in the first quarter of 2010. As a result, we consider that our innovative strength has been increased significantly. SolarWorld Innovations – Group development “from lab to fab”

TARGET ACHIEVEMENT 2009 AND TARGETS 2010+

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Ziele 2009+

Ist 2009

Ziele 2010+

finance

Revenue target: Above previous year’s level at € 1 billion as the next stage (Premise: Stabilizing macroeconomic development))
Profit or loss result: Depending on which price reduction must and can be compensated for on the cost side

		Revenue: € 1.01 billion (previous year: € 0.9bn)
		EBIT^g: € 151.8 million (previous year: € 263.3m) // Market-induced price reductions caused increased pressure on margins in 2009.

Revenue target: Sustainable exceeding of the previous year’s revenue level of € 1 billion (premise: further recovery of the overall economic development combined with growth of the solar market, which will be materially influenced by the pending legal framework on the core market Germany).
Profit or loss target: Depending on the level of price degression on the cost side that has to – and can be – absorbed.

Shareholder participation in corporate success

Dividend^g: € 0.16/Share (dividend proposal to Annual General Meeting 2010)

Participation of our shareholders in the success of the company

Customers

Further development of the
SolarWorld brand
Renewed increase in customer satisfaction

Brand awareness in Germany
increased:

Unaided: 2009: 5.8 per cent; 2009/2010: 7.1 per cent
Aided: 2009: 17 per cent;
2009/2010: 24.9 per cent
Source: EuPD Research/Brandmonitor

In 2009 the following factors were identified for the first time in our annual customer survey:
- Satisfaction with service: 87.6 per cent “very good” and “good”
- Satisfaction with product quality: 99.8 per cent “very good” or “good”
- Satisfaction with SolarWorld in general: 85.4 per cent “very satisfied” or “satisfied”

Further development of the
SolarWorld brand
Renewed increase in customer satisfaction

Expansion of international sales also on new markets and in business fields with emphasis on the US market and rural electrification

Market-induced priority Germany, expansion of German sales team:
+ 62 per cent

Expansion of international sales also on new markets and in business fields with emphasis on the US market and rural electrification

Foreign quota: Stabilization at previous year’s level

Below previous year at 29 (previous year: 54) per cent. Reason: Market-induced, doubled demand in Germany with slight stagnation on international markets

Foreign quota: Above previous year’s level

Processes

Minimum target: Compensating for EEG reduction on annual average by way of internal cost reductions
(in €/Wp)
ISO 14001 certification^g of US production locations (earliest 2010)
Capacity expansion to meet rising world demand:
- Wafers: 1,000 MW year-end capacity
- Cells: 450 MW year-end capacity
- Modules: 450 MW year-end capacity

		Production costs cut through technical progress and economies of scale^g in line with EEG reduction as at 1 January 2009.
		on schedule
	Market-induced adjustment of targets during the year (rise in module demand) from planned wafer expansion towards expansion of production capacities for modules: Wafers: 900 MW Cells: 450 MW Modules: 500 MW

Minimum target: Compensating for EEG reduction as at 1 January 2010 (9 per cent roof systems; 11 per cent free field systems) via internal cost reduction (in €/Wp) // further 16 per cent planned as at 1 July 2010 not immediately and completely feasible on the cost side in 2010
ISO 14001 certification of all remaining locations including South Korea
ISO 9001 certification in South Korea
Capacity expansion 2010/2011 to meet rising world demand:
- Wafers: 1,250 MW
- Cells: 750 MW
- Modules: 1,250 MW

Employees

Gain and retain qualified skilled and management staff:
- Employment increase by around 25 per cent
- Strengthening employer attractiveness by Employer Branding
- Group-wide executive and talent development
- Completion of code of ethics and code of conduct and communication to employees

		175 new jobs created/ + ten per cent, growth was secured by headcount, parallel investment in process optimization
		Germany: Study “Great Place to Work” 2009 – 55^th (previous year: 57^th) place/Graduate barometer 15^th place
		Group-wide executive and talent development
		Postponed to 2010/Internal coordination process not yet completed

Employment expansion by about 10 per cent
Continuation
Emphasis on group-wide executive development
After approval by the works council the codes will be officially introduced and communicated and included in in-company training and further education

Society

Taking into account the interests of stakeholder^g groups: Voluntary disclosure of sustainability reporting in accordance with GRI, Carbon Disclosure Project^g
Work on further ISO certifications^g
(US sites)
Continuation:
- Implement awareness-building measures regarding climate and resources protection
- Promote research: Expand cooperation with universities and scientific institutes
- Contribute to regional development via Solar2World projects (not-for-profit)

		Plus signature of Global Compact^g
		Achieved
		Information via inserts, target group mailings, school projects, cultural sponsoring for protection of species, etc.
		Research cooperations 2009: 25 (previous year: 21)
		Project scope: 114 (previous year: 53) kWp

Taking into account the interests of stakeholder groups: voluntary disclosure of sustainability reporting in accordance with GRI, Carbon Disclosure Project as well as Global Compact
ISO certifications (remaining sites, including South Korea)
Continuation:
- Implement awareness-building measures regarding climate and resources protection
- Promote research: Expand cooperation with universities and scientific institutes
- Contribute to regional development via Solar2World projects (not-for-profit)

= Target achievement 100 per cent

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