* Plans to set up Photowatt as stand-alone company
* ATS Q3 EPS C$0.04 vs C$0.16 year-ago
* Revenue falls 38 pct (Recasts after company conference call; adds background)
By Nicole Mordant
VANCOUVER, Feb 9 (Reuters) - ATS Automation Tooling Systems Inc (ATA.TO) is working to split off its solar energy unit, Photowatt Technologies, into a stand-alone company, and may possibly sell it, ATS’s chief executive said on Tuesday.
The plan to separate Photowatt is still at an early stage but will include Photowatt’s solar business in France, which manufactures ingots, wafers, cells and modules, as well as its recently launched venture in Ontario where ATS is based.
“One course of action would be to sell it. Our intention is to move forward as quickly as we can, assisted by factors that we can’t control like the solar market itself,” CEO Anthony Caputo said on a conference call after ATS released its third-quarter results.
Photowatt, like other manufacturers of solar equipment worldwide, is feeling the pinch of a market downturn caused by investment drying up during the recession.
Reductions in feed-in tariffs, or the prices that utilities have to pay generators of renewable energy, in Germany and France, and increased inventory levels and capacity in Asia, are expected to hurt demand and average selling prices this year and into next.
Caputo said ATS is looking for ways to cut expenses at Photowatt, an exercise that could cost it C$10 million ($9.3 million) and might include not renewing contracts for some temporary workers.
Photowatt has been operating in France for 30 years but only opened its doors in Ontario in December after the Canadian province unveiled a rich trove of incentives for renewable energy producers.
In addition to its solar business, ATS through its ASG unit also designs and builds factory automation systems for manufacturers in a wide variety of industries including telecoms, autos and pharmaceuticals.
For the third quarter ended Dec. 27, ATS as a whole reported a sharp drop in net income to C$3.7 million, or 4 Canadian cents a share, from C$12.3 million, or 16 Canadian cents, a year ago.
Overall revenue fell to C$138.1 million from C$221.7 million.
Analysts, on average, had expected the company to earn 8 Canadian cents on revenue of C$149.3 million, according to Thomson Reuters I/B/E/S.
ATS shares fell 5 Canadian cents to C$7.20 on the Toronto Stock Exchange.
Photowatt’s revenue fell 25 percent to C$59.7 million in the third quarter as sales volumes dropped 22 percent to 12.8 megawatts and prices also fell.
Revenue at its ASG segment fell 45 percent to C$78.6 million, while order bookings were lower at C$92 million.
The company also said many customers of ASG continued to delay investment decisions and that this would cause volatility in order bookings and pressure revenues in the short term.
$1=$1.07 Canadian Additional reporting by Ashutosh Joshi in Bangalore; editing by Rob Wilson