Solar gloom hits Q-Cells and Solon
A lack of project funding threatens to undermine the solar industry's already fragile growth prospects, two of the sector's biggest players said on Tuesday as they reported profits that missed market forecasts.
Q-Cells, the world's largest maker of solar cells, also slashed its 2009 sales outlook for the third time since December while German peer Solon, a solar module maker, posted a bigger-than-expected first-quarter net loss.
Both companies' shares were tipped to open sharply lower in Frankfurt trade.
"In view of the ongoing uncertain market environment due to financing restrictions for larger PV (photovoltaic) systems in particular, it is currently still difficult to give a precise forecast for the full year," Q-Cells said in a statement.
Q-Cells said it now expected 2009 sales to come in between 1.3 billion euros and 1.6 billion euros ($1.77-2.18 billion), down from the previous 1.7 billion-2.1 billion euro forecast range.
"(The) reduction of sales guidance has been widely expected but consensus now is rather at (the) upper end of guidance. (We) would expect shares to trade lower on significantly cut sales guidance and continuing uncertainty regarding profitability," a Frankfurt-based trader said.
Shares in Q-Cells were indicated 6.1 percent lower and Solon down 9.9 percent in pre-market trade, while Frankfurt's technology index was seen 0.6 percent lower.
Q-Cells posted sales of 224.8 million euros for the first quarter and a net loss of 391.9 million euros, partly linked to writedowns on last week's sale of its stake in Norway's Renewable Energy Corporation.
Analysts had on average expected sales of 208 million and a net loss of 339 million euros.
SOLON SEES Q2 LOSS
Solon's net loss was 18.5 million euros, missing a consensus of 14 million in a Reuters poll of analysts.
"While demand for solar modules has been on the rise again in the second quarter, the power plants business is still suffering from the ongoing critical situation in project finance," it said in a statement.
"Therefore assume that Solon will also finish the second quarter with a loss."
Solon in April said it may have to take an impairment loss of 40 million euros due to funding problems at Silicium de Provence, an affiliated French company.
Massive oversupply of cells, modules and wafer had led Q-Cells -- along with the world's No.2 cell maker Sharp Corp -- to cut outlooks or jobs earlier this year, while Solon even withdrew its 2009 outlook last year.
According to StarMine, which weighs analysts' forecasts based on their track records, Q-Cells trades at 14.3 times estimated 12-month forward earnings, less than half of No.3 cell maker Suntech Power's 30.6, as well as No.4 Kyocera, trading at 66.5 times. Solon trades at 12 times.
