PV Crystalox Solar to return cash to shareholders

PV Crystalox Solar saw shares rise strongly on Monday morning following news that is to return some of its cash pile to shareholders.

In an interim management statement, the manufacturer of components for solar power cells, announced: "The group has a strong net cash balance and the board is continuing to reorganise the group, to enable the return of cash to shareholders. The board expects to make a further announcement before the year end."

At the end of June, the company, which manufactures components for solar power cells, had €122.4m of cash. Sandeep Deshpande, analyst at house broker JP Morgan, estimates that it will have net cash of €87.6m or 17p a share at the end of 2012.

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There are hopes that the company will return most or all of this cash to shareholders, possibly as part of a long-term plan to wind down the company, which is bleeding money in an exceedingly tough market for its products.

While the amount to be returned is uncertain, what is clear is that its trading position continues to deteriorate owing to vast overcapacity in the photo voltaic market. Spot wafer prices have continued to fall and are now 76% below the level of April 2011 and remain significantly below industry production costs.

About this the company commented: "In response to such market conditions, the group adopted a cash conservation strategy 12 months ago and reduced production volumes. Shipment volumes for the full year are now expected to be in the range of 100-105MW which is at the lower end of the 100-120MW range indicated at the time of our interim results on 16 August 2012.

"While the group has maintained its average selling prices significantly above spot levels, the board continues to expect that the group will incur an operating loss in the second half of this year."

CM