UPDATE 2-JA Solar cuts capacity as weak prices lead to another loss

Mon Mar 25, 2013 11:14am EDT

* Sees first-quarter shipments of 410-430 MW vs 500 MW in fourth quarter

* Fourth-quarter loss $2.65/ADS vs $0.39/ADS year earlier

* Expects European investigations to impact shipments to Europe

* Shares down 12 pct

By Garima Goel

March 25 (Reuters) - Chinese Solar panel maker JA Solar Holdings Co shuttered some of its production capacity to rein in costs as it struggles with a steep decline in panel prices at a time when the country's support for the industry is waning.

Shares of the company fell as much as 12 percent after it reported a loss for the seventh straight quarter and negative margins for the second quarter on Monday.

"The disappointment is not so much the shipment guidance but the fact that gross margin remained firmly negative in the fourth quarter even with the beat in shipments," Raymond James analyst Pavel Molchanov said.

Fourth-quarter gross margins improved to negative 4.6 percent from negative 5.9 percent in the third quarter. The company said it expects positive margins in the first quarter, helped by an increasing focus on Japan, the Middle East and South America.

Solar modules fetch the highest prices in Japan, where the government is trying to phase out nuclear power, analysts have said.

Rapid capacity expansion in China and a drop in demand in top market Europe have sent panel prices plunging 66 percent over the past two years, making profits elusive for solar product makers and forcing many to close plants.

China-based Suntech Power Holdings Co Ltd, whose main unit is involved in insolvency proceedings, closed its only U.S. solar panel plant earlier this month.

China and emerging markets like Japan accounted for more than two-thirds of JA Solar's fourth-quarter shipments of 500 megawatts (MW), while Europe made up about 16 percent.

The ongoing European investigations into alleged dumping and subsidies of China-made solar products could impact the company's shipments to Europe, Chief Operating Officer Jian Xie said on a post-earnings conference call.

JA solar, all of whose manufacturing operations are in China, expects first-quarter shipments to fall to 410-430 MW.

The company expects to ship 1.7-1.9 GW of cells and panels this year, compared with 1.7 GW in 2012.

Shares of rivals Trina Solar Ltd and Yingli Green Energy Holding Co fell more than 5 percent in morning trading.

SHUTTERED CAPACITY

JA Solar said it shut 300 MW, or 12 percent, of its cell production capacity and 300 MW, or 17 percent, of panel capacity during the fourth quarter.

The company had annual cell production capacity of 2.5 GW and panel capacity of 1.8 GW as of Dec. 31.

A number of solar companies including industry leaders First Solar Inc and SunPower Corp have cut production in the past few months.

During the fourth quarter, JA Solar's net loss widened to $102.4 million, or $2.65 per American Depositary Share (ADS), from $68.3 million, or $0.39 per ADS, a year earlier.

Revenue fell 13 percent to $268.1 million.

Shares of the company were trading down at $3.83 on the Nasdaq on Monday.

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