WRAPUP 1-Solar cos LDK, JA Solar lose money, shares slump
* China's JA Solar, LDK Solar post quarterly losses
* LDK takes bigger-than-expected inventory writedown
* JA Solar inventories up, prices down nearly 30 pct
* JA stock slides nearly 15 pct, LDK down 15 pct
LOS ANGELES, Aug 12 (Reuters) - Chinese solar companies JA Solar Holdings Co Ltd (JASO.O) and LDK Solar Co Ltd (LDK.N) posted quarterly net losses on Wednesday as a global glut of solar panels battered prices for their products, sending the companies' shares down sharply.
The solar industry has suffered from a dearth of financing for renewable energy projects due to the global financial crisis. In addition, an economic recession and a pullback in solar incentives in Spain have led to an oversupply of solar panels that has sent prices into tailspin and hampered manufacturers' profits.
JA Solar, which is based in Shanghai, said inventories rose 18 percent in the second quarter while average selling prices tumbled nearly 30 percent.
LDK, meanwhile, posted a wider-than-expected net loss after taking a large inventory writedown. It also forecast third-quarter revenue below Wall Street estimates [nN12147177].
"The numbers were miserable," Soleil analyst Paul Leming said of LDK's results. "This company continues to burn cash and book value has been cut in half over the last three quarters .... There is not much to like here."
LDK has been building a polysilicon plant adjacent to its solar wafer facility in Xinyu City, China, to help offset high costs on its primary raw material. The company said it logged $250 million in capital expenditures during the quarter, mostly for its polysilicon plant.
On a conference call to discuss the results, executives were questioned about whether the company would consider selling its polysilicon plant to reduce the strain on its balance sheet or or cutting production to bring output in line with demand.
LDK executives said, however, that output levels were appropriate for customer demand and that its in-house polysilicon was an important long-term strategy.
To help shore up its balance sheet, LDK said it is seeking a 2.5 billion yuan loan from a Chinese institution and plans to issue $200 million of new shares once market conditions improve. It also hopes to replace short-term loans with longer term loans.
Earlier on Wednesday, solar cell maker JA Solar reported a wider quarterly net loss and said its average selling prices would fall another 5 to 10 percent in the third quarter after sliding 27 percent in the previous period [nN11533123].
Simmons & Co analyst Burt Chao said that in addition to the rise in inventories and sharp drop in prices, investors were disappointed that the company did not announce any new major customers. BP Plc's (BP.L) BP Solar accounts for about 30 percent of JA Solar's sales, he said, and investors would like to see a more diverse mix of customers. Continued...
