Solar business powers MEMC results, shares jump
(Reuters) - Silicon wafer maker MEMC Electronic Materials Inc WFR.N said its solar projects business was seeing better demand as it sold several large projects in Europe, helping the company report a surprise adjusted quarterly profit.
The company's shares rose 39 percent to $2.87 on Wednesday on the New York Stock Exchange.
MEMC's margins have fallen in the past year as prices for silicon wafers, used in semiconductor chips and solar cells, fell due to an oversupply. To cut costs, the company said in December it would slash more than 1,300 jobs, or a fifth of its workforce.
MEMC said the semiconductor industry, sales to which brought in 29 percent of its revenue in the second quarter, is expected to grow in the second half of this year following a recovery that started in the June quarter.
"Our read of customers and the market indicates improved but limited demand growth in the second half," Chief Executive Ahmad Chatila said on a conference call.
The company's solar unit SunEdison, however, has been faring better than the semiconductor business. In July, the unit closed contracts to sell four projects in Bulgaria and Italy totaling 98 megawatts (MW).
Solar installations in Europe rose in the second quarter before some incentive cuts came into effect in July.
"Despite continued pressure on upstream pricing, the downstream solar project business has experienced relatively good demand," Chief Financial Officer Brian Wuebbels said on the call.
The company's strong solar sales in the second quarter — a 39 percent increase in non-GAAP revenue — come days after solar panel maker First Solar Inc (FSLR.O) raised its full-year profit forecast.
MEMC did not provide specific sales and profit forecast for the year ahead, citing the uncertainty in the semiconductor and solar markets.
Second-quarter net loss was $61.3 million, or 27 cents per share. GAAP gross margin fell to 13.2 percent, from 24.3 percent a year earlier.
Adjusted profit was 14 cents per share. Analysts had expected a loss of 2 cents, according to Thomson Reuters I/B/E/S.
Non-GAAP revenue, which included $125.0 million in deals related to real estate and leasing back of sold assets, rose 20 percent to $933.4 million, above estimates of $749.5 million.
(Reporting by Krishna N. Das in Bangalore; Editing by Supriya Kurane and Saumyadeb Chakrabarty)
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