EANS-Adhoc: SOLON SE / SOLON publishes figures for the first quarter of 2011 - performance suppressed by weak market environment

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quarterly report

12.05.2011

SOLON publishes figures for the first quarter of 2011 - performance
suppressed by weak market environment

- Group revenues for the first quarter at EUR65.2 million
- Operating loss of EUR17.0 million
- Consolidated net loss of EUR21.5 million

Berlin, May 12, 2011 - SOLON SE, Berlin, Germany, today presented its business
figures as of March 31, 2011.

In the first three months of 2011, the solar industry experienced
far-reaching changes of the general conditions in its major European
markets of Germany and Italy. In early February, the German Bundestag
announced additional reductions in solar subsidies to take effect as
of July 1 of this year, thereby clarifying the future subsidy
environment at an early stage. However, the expected surge in demand
for solar installations in the spring after the typically weak sales
of the winter months failed to materialize. Apparently, many German
customers delayed making investment decisions in expectation of a
further drop in prices in the run-up to the next tariff reduction.
Another surprise originated from Italy where the law on feed-in
tariffs which had come into effect at the beginning of the year was
abrogated as of May 31 of this year. Despite repeated announcements,
the enactment of a successor regulation was delayed until May. This
caused a great deal of uncertainty among customers and investors and
not least among the banks committed to financing of solar projects.
The result was that current projects were delayed and new business in
the power plant segment came to a virtual standstill in the first
quarter.

In this weak market environment, SOLON generated consolidated
revenues of EUR65.2 million in the first three months of 2011 which
still fell short of the sales level in the first quarter of 2010
(EUR88.3 million). The weak revenues had a negative impact on the
Company's profitability and led to an EBIT loss of EUR17.0 million
(Q1 2010: EBIT loss of EUR6.4 million) and a consolidated net loss of
EUR21.5 million (Q1 2010: consolidated net loss of EUR8.2 million).
This reflects a loss per share of EUR1.25 (prior-year period: loss
per share of EUR0.65).

SOLON's sales of photovoltaic installations reached a total output of
32 MW in the first quarter of 2011 (Q1 2010: 43 MW). The weakness of
the German market is also reflected in the fact that SOLON generated
80% of Group revenues outside of its home market, primarily in Italy
and the U.S. The spinoff of the operating activities of the Austrian
subsidiary at the beginning of 2011 reduced the number of employees
at all SOLON locations to 797 as of March 31, 2011 (December 31,
2010: 912).

As a consequence of the weak business performance, net debt rose
during the quarter to EUR402.1 million (December 31, 2010: EUR369.1
million). Working capital increased to EUR213.0 million compared to
year-end 2010 (EUR172.5 million), reflecting a working capital ratio
in relation to revenues of the last 12 months of just under 36%.
Accounts receivable were reduced significantly and dropped from
EUR170.7 million at year-end 2010 to EUR148.4 million as of March 31,
2011. This was, however, in contrast to increased inventories of
unfinished products and work in progress totaling EUR42.7 million due
to the weaker than expected demand. A third of this amount resulted
from project earnings for the 21 MW power plant for the U.S. customer
Arizona Public Service which is currently under construction. Demand
for solar installations in Germany has gradually picked up since the
end of March. Based on the Company's estimation that fewer solar
systems were installed throughout Germany in March than was expected
at the beginning of the year, it can be assumed that the reductions
in the feed-in tariffs based on the installation figures for the
months of March to May 2011 may remain significantly below the
maximum rate as of July 1. This would be the prerequisite for a
relatively balanced development of demand in Germany in the rest of
the year. After an initial estimation of the revision of solar
subsidies in Italy presented in early May, it is safe to assume that
Italy will continue to be attractive as a location for solar
investments, not least due to the fact that the subsidy rates will
continue to be higher than the German level despite an additional
significant decrease. However, the market development may shift more
strongly in the future to the segment of private and commercial roof
installation with output of up to 1 MW. SOLON sees itself as well
positioned in this segment owing to its many years of experience in
the implementation of large roof installations in Italy and its
product range of specific roof solutions.

The significantly weaker than expected business performance in the
first quarter has prompted SOLON management to revise its revenue and
income planning for the current year. The Management Board currently
assumes that it will not be possible or not entirely possible to make
up for the drop in revenues of the first quarter during the rest of
the year. It therefore expects that consolidated revenue for 2011
will not surpass that of the previous year. As a consequence of this
lower revenue expectation, the income targets were reduced
accordingly.

The complete interim report of SOLON SE as of March 31, 2011 is
available for download from the Company's website at www.solon.com.

SOLON SE
Therese Raatz
Investor Relations
Phone: 030 / 818 79 - 9305
Fax: 030 / 818 79 - 9300
E-Mail: investor@solon.com

end of announcement euro adhoc
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ots Originaltext: SOLON SE
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Therese Raatz
Head of Corporate Communications
Tel.: +49 30 818 79-9305
E-Mail: therese.raatz@solon.com

Branche: Energy
ISIN: DE0007471195
WKN: 747119
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