European renewables bank on 2010 as demand looks up

By Christoph Steitz and Jonathan Gleave

FRANKFURT/MADRID (Reuters) - European renewable companies posted moderate to sharp declines in quarterly results but sounded more upbeat for 2010, as costs cuts and an expected pickup in demand help lift profits after a year of turmoil.

Three of Germany's top solar energy companies said they expected to either return to or grow profits next year following a year of weak economic demand, reduced government subsidies and bruising price competition from low-cost Asian rivals.

The two biggest -- Q-Cells, among the world's largest solar cell makers, and Conergy -- aim for a 2010 operating profit.

Still, both companies posted large quarterly net losses, with Q-Cells, a supplier of cells and module components to commercial customers, losing nearly a quarter of a billion euros.,

Solar equipment wholesaler Phoenix Solar, which like Conergy, installs residential solar roof panels, posted a small third-quarter net profit, but cut its 2009 outlook due to delays in the financing of solar power plants.

Spanish wind turbine maker Gamesa posted a 21 percent fall in nine-months core profit from a year earlier, but said that its activity should pick up in the fourth quarter of 2009 and plans to launch new products in 2010

Investors will have to wait until February for a 2010 outlook for Gamesa, which was optimistic about the Spanish business environment in 2010 thanks to new renewables regulation, but did not see a recovery at its US business in the short term.

Compatriot Acciona -- which is active in the markets for both wind and solar energy -- said it expected to install at least 400 megawatts (MW) of wind and 100 MW of solar power next year.

Meanwhile, German group SMA Solar Technology raised its 2009 guidance for the second time.

"Margins of European solar players remain under pressure, but demand is improving," said Arthur Hoffmann, manager of the new power fund at Swiss Bank Sarasin & Cie.

Renewable companies have been dealt a blow by the global economic downturn, with makers of solar cells and modules -- such as Q-Cells and Conergy -- hit hard by a worldwide slump in prices, while wind power companies have suffered from a bottleneck in project financing and customer delays.

The importance of solar and wind energy is likely to be highlighted at a global summit in Copenhagen, Denmark, in December, where new steps to combat global warming could be agreed.

PRICES HALVING

Q-Cells and Conergy have massively underperformed the FTSE clean tech index, since the beginning of the year, while Phoenix Solar, which installs solar panels on roofs, outperformed as end-customer demand held up relatively well.

Shares in Q-Cells, Conergy and Phoenix Solar all closed down 3.6 to 6.3 percent and Gamesa closed down 1.2 percent, while Acciona closed up 1 percent.