Trina, Solarworld post losses, German cuts hit stocks

Thu Feb 23, 2012 5:13pm EST

(Reuters) - The collapse of solar panel prices drove China's Trina Solar Ltd and Germany's SolarWorld AG to post losses, results that could worsen as Germany announced new cuts to the subsidies that have made the country the world's largest solar consumer.

Shares across the solar sector sank after the Germany announced faster-than-expected cuts to its solar subsidies, raising fears that demand there could fall by more than half this year.

Solar manufacturers have suffered from a huge oversupply during 2011 that drove prices for panels down about 50 percent, even as global demand rose.

That price drop has forced a number of U.S. and European companies into bankruptcy and prompted others to charge that Chinese makers such as Trina have dumped supplies on global market below their production cost.

Trina, one of the largest solar makers in China, reported a bigger-than-expected loss for the fourth quarter despite selling far more panels than it had expected.

The company said it shipped 425 megawatts of panels during the quarter, well above the 320 MW to 350 MW the company had forecast, but its gross profit margin narrowed to 7.1 percent, lower than the 10 percent it had expected.

Trina's net loss in the fourth quarter was $65.8 million, or 93 cents per share, lagging the 39 cent loss analysts had estimated, according to Thomson Reuters I/B/E/S.

"They just put up a massive loss in the quarter despite some pretty big shipments," said Mark Bachman, analyst at Avian Securities. "It was profitless growth."

The company said it expected profit margins to rebound in the first quarter and forecast full-year shipments could grow nearly 40 percent in 2012.

CUTS DIVIDEND

SolarWorld recorded one-time impairment charges of 313 million euros ($416.7 million) on outdated production equipment, resulting in a loss before interest and taxes of 233 million euros.

It also cut its dividend to 0.09 euros per share from 0.19 euros last year and said revenue had tumbled to 1.067 billion euros from 1.322 billion.

"The decline in revenue can be attributed to global excess capacities and the resulting dumping of module prices," it said in a statement after the market close.

German Environment Minister Norbert Roettgen said on Thursday the cuts in incentives there were designed to slow the rapid growth of solar power in Germany, where more than 7,500 megawatts was installed last year.

The cuts in the subsidy, by up to 30 percent, could begin on March 9, nearly a month earlier than expected. That pressured stocks across the sector, including Q-Cells, Renewable Energy Corp (REC), Suntech Power Holdings and First Solar

TRADE CLASH

SolarWorld's U.S. subsidiary and six anonymous peers filed a trade complaint in October, contending that China's support of its solar companies breached global trade rules and that those companies were dumping equipment in the U.S. market below the cost of production.

The Chinese manufacturers have denied the trade charges, but many are preparing for Washington to begin imposing tariffs on imports from the country.

Trina recorded a $3.3 million charge in the quarter for some December shipments to the United States based on its expectation that Washington would impose a retroactive tariff of 8 percent.

That 8 percent is well below the 20 percent to 30 percent tariff many industry analysts are forecasting.

Trina was trying to shift its production to sites outside of China to try avoid the tariff, Chief Financial Officer Terry Wang told a conference call.

"We actually planned strategically in working with our partners overseas for outsourcing," he said. "We're right now still in that process."

Trina's shares slumped 11.6 percent to $8.63 per share on the New York Stock Exchange, while SolarWorld shares fell 7.3 percent to 3.69 euros in Frankfurt.

(Additional reporting by Victoria Bryan and Christoph Steitz in Frankfurt; Editing by Steve Orlofsky)

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