* Q4 EPS $1.09 vs $0.92 Wall Street view
* Q4 revenue more than tripled to $920.9 mln
* Reiterates 2011 revenue outlook of $3.5 bln to $3.7 bln
* Exploring spin-off of polysilicon business
* Shares drop 4 percent in extended trading
(Adds details from conference call; updates share activity)
By Nichola Groom
LOS ANGELES, March 17 China's LDK Solar Co Ltd
LDK.N repeated its 2011 revenue outlook, disappointing some
investors who had been hoping for more following a stellar
earnings report, and sending the company's shares down 4
percent after hours.
The company also said some customers in Italy were holding
back on orders until that nation's new solar subsidy structure
is clarified in the coming weeks.
LDK products such as wafers and cells are used to build
photovoltaic solar panels that turn sunlight into electricity.
The company has benefited from expanding into making the
industry's key raw material, polysilicon, as well as selling
its own modules.
By adding more products LDK has streamlined costs and
increased profit margins as it seeks to increase its presence
in the fast-growing market for renewable energy.
LDK's fourth-quarter net income was $145.2 million, or
$1.09 per American Depositary Share (ADS), easily topping
analysts' average estimate of 92 cents per ADS, according to
Thomson Reuters I/B/E/S. A year ago, LDK recorded a net loss of
$24.3 million, or a loss of 22 cents per ADS.
Revenue more than tripled to $920.9 million from $304.6
million in the same period a year ago. Analysts, on average,
had expected revenue of $877.12 million.
Despite the better-than-expected results LDK repeated its
2011 revenue outlook of $3.5 billion to $3.7 billion.
Also on Thursday, LDK said it was exploring a potential
spin-off of its polysilicon business. An initial public
offering of the unit could help the company pay down a heavy
debt load that includes $1.5 billion in short-term borrowings
and $358 million in convertible senior notes.
Polysilicon prices have risen in recent months as supplies
remain tight and one analyst said the company should seize the
opportunity to spin off that business before prices retreat.
"This is as good a time as they are ever going to get,"
Morningstar analyst Stephen Simko said. "They would receive a
lot of proceeds from this sale."
LDK executives declined to say how much money they expected
the sale to raise, adding they would provide more information
in two to three months.
The company recorded a gross margin of 27.3 percent during
the fourth quarter, up from 22.2 percent in the previous
Solar demand surged last year as project developers
scrambled to build solar power systems ahead of expected
declines in solar subsidies in top European markets such as
Germany, Italy and France. Those cutbacks are expected to
result in an oversupply of solar products in the market later
this year that could drive prices down and hurt profits.
"Things could easily stay strong for a quarter or two, but
we're nearing the end of the boom in solar from a profitability
standpoint," Simko said.
But LDK executives said module demand was still strong in
Europe and prices have remained stable. Prices may decline,
however, in the third and fourth quarters, they said.
Nevertheless, they said some customers in Italy were
holding orders until that nation's solar policy becomes
LDK also said some of its polysilicon supplies were
disrupted by the earthquake in Japan, but added it could source
that supply from elsewhere. It also said some of its Japanese
wafer customers had been affected, but it would relocate those
sales in other markets.
The company said gross margins would fall between 24
percent and 29 percent for the year.
For the first quarter, LDK expected revenue of $800 million
to $850 million and margins of 27 percent to 29 percent.
LDK expected to ship 2.7 gigawatts to 2.9 gigawatts of
solar wafers, 800 megawatts to 900 megawatts of solar modules
and 500 MW to 600 MW of solar cells, and to produce between
10,000 and 11,000 metric tonnes of polysilicon.
LDK Solar shares were down 4 percent at $12 in extended
trading after closing up 59 cents, or nearly 5 percent, at
$12.50 on the New York Stock Exchange.
(Reporting by Nichola Groom; editing by Steve Orlofsky and