UPDATE 3-LDK cuts margin view on silicon costs, shares fall
(Recasts; adds details from conference call)
LOS ANGELES, May 12 (Reuters) - China's LDK Solar Co Ltd (LDK.N) reported a quarterly profit on Monday that topped forecasts and raised its revenue outlook for the year, but the solar wafer maker cut its gross margin forecast due to soaring costs of a key raw material and its shares slid 5.8 percent.
LDK and other solar power companies have enjoyed rapid growth in the last year due to rising fossil fuel prices and concerns about global warming that have spurred demand for renewable energy sources.
At the same time, the industry is struggling with higher costs on polysilicon, the material that is used to transform sunlight into electricity.
On a conference call with analysts, LDK executives said they expected polysilicon prices to remain high over the next two quarters.
LDK said first-quarter net income was $49.8 million, or 45 cents per American Depositary Share, compared with $21.6 million, or 27 cents per ADS, a year ago.
The company in April had forecast earnings for the quarter of 40 cents to 44 cents per ADS. Wall Street analysts, on average, had expected earnings of 39 cents a share, according to Reuters Estimates.
Earlier on Monday, Chinese solar cell maker JA Solar Holdings Co (JASO.O) posted a better-than-expected quarterly profit as revenue more than tripled.
JA Solar's first-quarter net income was $22 million, or 14 cents per ADS, compared with $8.6 million, or 7 cents per ADS, a year ago. Revenue rose to $160 million from $47.8 million, and JA backed its 2008 revenue outlook of $1.03 billion to $1.14 billion.
LDK's first-quarter revenue was $233.4 million, at the high end of the company's $225 million to $235 million forecast as six new supply agreements led to stronger-than-expected shipments.
Analysts were expecting revenue of about $228.5 million, according to Reuters Estimates.
In the same period last year, LDK recorded revenue of $73.4 million.
Gross margins were 27.7 percent, down from 30.1 percent in the previous quarter.
Executives said margins were pressured by both higher polysilicon costs as well as an increase in shipments of wafers under long term contracts, which have more favorable pricing for customers.
To help offset higher polysilicon costs, LDK is currently building its own polysilicon production plant adjacent to its solar wafer facility in Xinyu City, China. Continued...
