Yingli Green Energy Holding Co. (YGE:US) and JA Solar Holdings Co. Ltd. (JASO:US), two of the top four solar-cell makers, cut forecasts for shipments after losses at the Chinese manufacturers widened and prices of their products plunged.
Yingli expects to ship 2,100 megawatts to 2,200 megawatts of photovoltaic panels this year, according to a statement today, down from a May forecast of 2,400 megawatts to 2,500 megawatts. JA Solar said it will ship 1,500 megawatts to 1,800 megawatts in 2012, compared with its earlier forecast of as much as 2,000 megawatts.
Chinese companies that dominate manufacturing of solar panels ramped up production in recent years, driving down prices as governments across Europe reduced incentives for the technology. The result increased losses and debt, adding to speculation some companies will need bailouts or bankruptcy protection to survive.
“Clearly, there’s a sustained trend here where overall demand for the second half of the year is shaping up weaker than many companies had hoped,” Pavel Molchanov, an analyst at Raymond James & Associates in Houston, said in an interview today. “Whether it gets worse is debatable because it’s truly about as bad as it can get. It’s more about how long it’s going to stay this way.”
JA Solar, based in Shanghai, said its net loss doubled to 457.8 million yuan ($72.1 million) in the second quarter, or 2.34 yuan an American depositary receipt, from 228.9 million yuan, or 1.39 yuan an ADR, a year earlier. Shipments were 418 megawatts in the quarter and are expected to increase to between 350 megawatts and 370 megawatts in the current quarter.
“In the second quarter, market conditions in the solar industry remained challenging,” JA Solar Chief Executive Officer Fang Peng said today on a conference call with analysts.
JA Solar ADRs, each worth one ordinary share, fell 10 percent to 95.9 cents at 11:11 a.m. in New York. Yingli’s ADRs, each worth one share, dropped 3.1 percent to $1.89.
Yingli, based in Baoding, had a loss of 573 million yuan, or 3.66 yuan an ADR, compared with net income of 375.6 million yuan, or 2.34 yuan an ADR, in the second quarter of 2011. Shipments rose 13.7 percent in the second quarter from the prior quarter, the company said in the statement, without giving the number of panels shipped, and it expects a “significant increase of demand in China in the second half of the year.”
Yingli faced “challenging market conditions” during the quarter, leading inventories to rise to $601.5 million from $395.5 million in the same period last year, Chief Financial Officer Li Zongwei said today on a conference call.
Higher shipments in the quarter “failed to contribute to revenue increases due to an industrywide decline” in pricing.
Prices for solar panels fell 36 percent industrywide in the past year, according to data compiled by Bloomberg. JA Solar was the largest maker of solar cells in 2011, followed by Suntech Power Holdings Co., Trina Solar Ltd. (TSL:US) and Yingli.
To contact the reporters on this story: Sally Bakewell in London at email@example.com; Justin Doom in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Reed Landberg at email@example.com