REFILE-UPDATE 3-Q-Cells gives cloudy outlook for solar market

Tue Feb 23, 2010 6:48am EST

(Deletes extraneous word "rise" in fourth bullet point)

* Says unable to predict prices, margins under pressure

* Posts bigger than expected 2009 net loss due to writedowns

* Says aims to be profitable this year

* Shares up 0.8 pct as investors cover short positions

(Adds analysts comments, shares)

By Christoph Steitz and Peter Dinkloh

FRANKFURT, Feb 23 (Reuters) - Q-Cells QCEG.DE, the world's fourth-biggest maker of solar cells, echoed competitors in warning on Tuesday of an uncertain year ahead as countries cut financial support for solar power and low-cost producers pressure prices.

While Q-Cells is sold out for the first half of the year it sees "unclear pricing dynamics" from July onwards, it said, adding that it could only say of 2010 that it aims to be profitable as prices remain so unpredictable.

Germany, which last year accounted for half of the entire 18 billion euros ($24.5 billion) global market for photovoltaic installations, will cut its crucial pricing incentives for solar power from July, a parliamentary source said on Tuesday. [ID:nBAT005153]

"It's hard to give a concrete outlook (for 2010) given the great uncertainty in the market," Q-Cells' chief executive, Anton Milner, said in a conference call for reporters.

"We expect strong market growth in the future, but margins will remain under pressure."

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Graphic on the increase in solar cell production:

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Expensive solar power depends on state support so that it can be sold on the power market, but countries throughout Europe, including Italy and France, are cutting their support regimes as the technology becomes more profitable and government finances are strained. [ID:nLDE61B0BW]

Rival First Solar (FSLR.O), which overtook Q-Cells as the world's biggest maker of solar cells in 2009, last week disappointed investors with its own outlook for 2010, pointing to the uncertain Germany market. [ID:nN18198393].

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Graphic on market share changes in 2008 vs 2009:

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Q-Cells already took a hit in 2009 when writedowns and plummeting component prices led to a larger than expected net loss, the company said earlier on Tuesday.

The manufacturer wrote down investments in Sovello -- a joint venture with peers Evergreen Solar ESLR.O and Norway's Renewable Energy Corp (REC.OL) (REC) -- as well as Sunfilm and Solaria Corp. [ID:nLB153099], [ID:nL664956]

That led to a net loss last year of 1.356 billion euros ($1.85 billion), more than the average of forecasts given by analysts in a Reuters poll, which predicted a net loss of 986 million euros.

Nonetheless, the Q-Cells share price was up 0.8 percent at 7.79 euros at 1100 GMT, dropping back from a day's high of 8.1 euros which analysts attributed to some short covering.

"According to my information short positions in Q-Cells are the ninth-largest of all short positions on European stocks," said Cheuvreux analyst Philippe Bumm.

The TecDAX .TECDAXI index of technology stocks traded in Frankfurt slipped 1.2 percent and the FTSE cleantech index .FTET50 fell 0.6 percent.

Sector investors are now expected to turn their attention to the performance of Chinese cell makers such as Suntech STP.N, the world's second biggest manufacturer, and Yingli (YGE.N), the fifth-biggest, which are expected to release fourth-quarter results on March 4 and 8 respectively.

The renewable energy unit of Spanish utility Iberdrola (IBE.MC), Iberdrola Renovables IBR.MC, will report its 2009 results later on Tuesday. ($1=0.7340 euros) (Editing by Greg Mahlich)

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