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Phoenix Solar Says Suppliers Might Not Weather Crisis Nicholas Comfort Phoenix Solar AG, a German builder of solar power plants, will cut the number of its crystalline- panel suppliers this year because of higher product availability and concerns some sellers may not weather the financial crisis. Of the five companies Phoenix considers short-term suppliers “we’ll source from three, maximum four,” Andreas Haenel, chief executive officer of Sulzemoos, Germany-based Phoenix, said by phone today. “A company’s financial strength will be one of the factors on which we choose our suppliers.” Shares in solar companies have plunged since October as tighter credit conditions forced renewable energy generators to cut equipment orders. The industry, which boosted manufacturing capacity last year when demand outstripped supply, has been hit by inventory writedowns and profit warnings as prices slip and clients cancel orders. Phoenix may start buying crystalline modules on a short- term basis after a five-month break at the end of the month or early April, Haenel said. Prices for the panels are likely to have fallen by up to 15 percent since November, and may be down that much for 2009 as a whole, he added. Still, Phoenix’s profit margins will be lower in 2009 because of a cap on state aid to the solar industry in Spain, according to the CEO. That country’s government plans to fund 400 megawatts worth of photovoltaic power plants this year, 20 percent of the capacity installed last year. Ebit Forecast Phoenix Solar expects earnings before interest and tax to fall 8.3 percent this year to 31 million euros ($40.3 million), while sales should gain 29 percent to 520 million euros, according to a statement on 2008 earnings today. For 2013, Phoenix Solar is targeting sales of 1.5 billion euros and Ebit of 100 million euros, Haenel said. Phoenix Solar gained as much as 1.72 euros, or 5.5 percent, to 32.90 euros in Frankfurt trading. The stock was up 3.5 percent as of 12:49 p.m. local time, valuing the company at 214.7 million euros. Suppliers’ warehouses will be better stocked than last year, meaning Phoenix will improve working capital by cutting order times to about three weeks, according to the CEO. The German power-plant builder has enough thin-film modules, a cheaper option than crystalline panels, to meet demand, Haenel said. Colder weather this quarter reduced installations and will lower sales for the period, company spokeswoman Anka Leiner said by phone earlier today. ‘Safe Bank’ Crystalline modules, made by stringing together silicon semiconductor cells, accounted for 40 percent of the panels Phoenix Solar installed last year and will probably do so again in 2009, the spokeswoman said. The power plant builder sources these panels with yearly contracts from Schott Solar GmbH, Haenel said. Agreements with the unit of a German glassmaker that traces its history back to 1884 are “a safe bank,” he added. Crystalline silicon modules account for about 90 percent of the global panel market, according to the European Photovoltaic Industry Association. The cheaper, less efficient thin-film technology makes up the remainder.