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UPDATE 2-Trina Solar posts loss as price drop weighs
February 23, 2012 / 1:00 PM / in 6 years

UPDATE 2-Trina Solar posts loss as price drop weighs

* Q4 net EPS loss 93 cents vs Wall St view for 39 cent loss

* Big loss despite strong panel shipments

* German solar incentive cuts, looming U.S. tariff weigh

* Shares slide as much as 10 pct

By Matt Daily

Feb 23 (Reuters) - China’s Trina Solar Ltd posted a larger-than-expected quarterly loss on Thursday as strong shipments of solar panels failed to offset steep declines in prices for renewable energy systems, sending the company’s shares plunging as much as 10 percent.

Solar manufacturers have suffered from a huge oversupply of equipment on the market, which drove prices for panels down about 50 percent last year, even as global demand rose.

That price drop has pushed a number of U.S. and European companies into bankruptcy and prompted others to charge that Chinese makers such as Trina have dumped supplies on global market below their production cost.

Trina said it shipped 425 megawatts on panels during the quarter, far higher than the 320 MW to 350 MW the company had forecast, but its gross profit margin narrowed to 7.1 percent, lower than the 10 percent it had expected.

Trina’s net loss in the fourth quarter was $65.8 million, or 93 cents per share, compared with a year-earlier profit of $145.3 million, or $1.87 per share.

That fell well short of the 39-cent-per-share loss analysts had forecast, according to Thomson Reuters I/B/E/S.

“They just put up a massive loss in the quarter despite some pretty big shipments,” said Mark Bachman, analyst at Avian Securities. “It was profitless growth.”

Revenues fell by about 32 percent from a year ago to $436 million.

Trina said it cut its costs for polysilicon, the key material that turns sunlight into electricity inside solar panels, to 30 cents per watt from 37 cents in the third quarter.

That figure would continue to drop, the company said, and it expects to lower its other panel costs to 60 cents per watt by the end of 2012 from 64 cents currently.

New cuts to solar power incentives in Germany announced on Thursday also weighed on the company’s shares, as market players expected the market there to shrink sharply this year.

TARIFF THREAT

Chief Financial Officer Terry Wang said on a conference call that the company was expecting the United States to impose a tariff on solar equipment imported from China when it announces a decision next month on a trade complaint.

That complaint, filed last year by SolarWorld USA, the U.S. arm of SolarWorld AG, and six anonymous companies contended that China’s support of its solar companies breached global trade rules and that those companies were dumping equipment in the U.S. market below the cost of production.

Trina took a $3.3 million charge in the quarter for some December shipments to the United States based on its expectation that Washington would impose a retroactive tariff of 8 percent.

Many industry executives expect Washington to impose the tariffs, but analysts expect it to be between 20 and 30 percent.

Trina was trying to shift its production to sites outside of China to try avoid the tariff, Wang said.

“We actually planned strategically in working with our partners overseas for outsourcing,” he said. “We’re right now still in that process.”

Shares of the company were off 8.4 percent to $8.94 per share on the New York Stock Exchange after hitting a low earlier in the day at $8.75.

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