JA Solar cuts forecast, sees solar “panic”
Chinese solar cell maker JA Solar Holdings Co Ltd said on Wednesday the global economic slump had triggered a “panic” in the solar market, prompting it to slash its sales forecasts and sending its shares down more than 25 percent.
Sales of solar cells and panels have risen sharply in recent quarters as companies such as JA Solar ramped up production of the clean power source, but the global economic slowdown has caused that growth to slow, leading to a supply glut.
“At this moment the market reaction has been panic,” Samuel Yang, chief executive officer, told a conference call.
The company, which posted a quarterly loss from its ties to defunct investment bank Lehman Brothers, said it had cut back on output of the cells that turn sunlight into electricity and would seek to renegotiate its polysilicon supply contracts.
That effort to cut costs for polysilicon, the key material in its cells, was an attempt to offset an expected 20 percent price decline in the average selling prices of its products.
“Just recently the euro depreciated dramatically, more than 23 percent. So we have to adjust our ASP (average selling price) to support our customers,” Yang said.
Europe is the largest market for photovoltaic solar equipment because of the subsidy programs set up by the German and Spanish governments.
Still, Yang said, JA Solar was one of the lowest cost solar cell manufacturers, which would enable it to take advantage of the downturn in demand to expand market share cash advance loans.
JA Solar said it would seek a 20 percent drop in the price it pays its suppliers for polysilicon in 2009, and that it had already won price concessions for 2008. The company would seek to push its contracted costs for silicon below the spot market price of about $200 to $220 per kilogram.
SALES TO SLOW
The company cut its 2008 revenue forecast to between $849.5 million to $878.9 million from the $1.05 billion to $1.17 billion it had forecast in October, and said its earnings per share would be near break-even.
It also cut its 2009 revenue forecast to $1.5 billion to $1.7 billion from the previously issued $2.0 billion to $2.2 billion.
Fourth quarter growth margins would drop to 5 to 7 percent, the company said, from 21.6 percent in the third quarter and 23.3 percent in the second quarter.
JA Solar said it lost a net $21.0 million, or 36 cents per American Depositary Receipt, in the third quarter. In the same quarter a year ago it earned $24.4 million, or 17 cents per ADS.
Excluding one-time items, the Hebei, China-based company reported earnings of 25 cents per share, just short of Wall Street analysts’ average forecast of 26 cents per share, according to Reuters Estimates’
Filed under: business by Wolf