Oversupply issues, pricing declines take shine off solar industry Q3 earnings

Solar panel makers Suntech Power Holdings (NYSE:STP), LDK Solar (NYSE:LDK) and Canadian Solar (NASDAQ:CSIQ) all posted quarterly losses Tuesday, as high solar panel production output has led to tough competition and a 40 percent plunge in prices.

The debt crisis in Europe is also another cause of the solar industry's woes, as funding for energy projects dries up as the region's governments tighten their belts.

Suntech Power posted a wider-than-expected quarterly loss, hurt by the depreciation of the euro as the company cut its full-year outlook for revenues and shipments.

Suntech, the largest producer of solar panels in the world by volume, cut its full year revenue outlook to a range of $3 to $3.1 billion from its prior view of $3.2 to $3.4 billion. Suntech also now expects to ship at least 2 gigawatt (GW) of solar products, down from its previous estimate of 2.2 GW.

Suntech's founder, chairman and CEO, Dr. Zhengrong Shi, said: "Looking forward, we expect excess capacity to fuel strong competition and consolidation in the next two to three quarters. This will be challenging for all solar companies."

Third-quarter net loss was $116.4 million, or a loss of 64 cents per share, compared with a profit of $33.1 million, or 18 cents per share a year earlier. Revenue rose 9 percent to $809.8 million in the third quarter, while total photovoltaic shipments rose by 36 percent.

Analysts were expecting a loss of 26 cents on revenue of $776.1 million, according to Thomson Reuters.
Suntech said foreign exchange loss was $56.3 million in the third quarter, compared with a foreign exchange gain of $42.0 million a year earlier.

Meanwhile, LDK Solar also reported a wider-than-expected third-quarter loss as it warned it expects challenging conditions in the industry to continue.

For its full-year, LDK Solar estimates revenue in the range of $440 to $520 million and gross margin between 2 and 7 percent.

LDK's chairman and CEO, Xiaofeng Peng, said: "During the third quarter, our business was impacted by the continued downturn in the solar industry. Weak market demand and rapidly declining average selling prices throughout the solar supply chain resulted in shipment volumes and revenues lower than what we previously anticipated."

For the quarter that ended September 30, net loss was $114.5 million, or 87 cents per share, compared with net income of $93.4 million, or 72 cents per share a year earlier. Net sales dropped 30 percent to $471.9 million.

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