FRANKFURT (Reuters) - Sharply contrasting first-quarter results at two of Germany’s top solar companies showed the importance of a strong presence in the United States as subsidies decline at home.
German solar company Q-Cells cut its sales outlook after lower subsidies, weak demand, overcapacities and pricing pressure in European markets hurt first-quarter earnings.
“This year will be even more challenging than I assumed,” Q-Cells Chief Executive Nedim Cen told reporters in a conference call, adding he could not rule out inventory writedowns in the course of the second quarter.
Peer SolarWorld, however, posted profit above expectations, adding that a strong U.S. market, where it made more than a quarter of first-quarter sales, helped it to offset falling demand for solar products in Germany, the industry’s biggest market.
Q-Cells said North America accounted for less than 18 percent of its sales in the first three months.
“It’s a no brainer: SolarWorld’s strategy is better than Q-Cells’,” a Frankfurt-based trader said, pointing to SolarWorld’s strong position in the U.S. market.
DZ Bank analyst Sven Kuerten said also that SolarWorld reported a significant increase in inventories in the first quarter, “but by far not to the same extent as Q-Cells.”
The company’s shares reflected their differing fortunes. Q-Cells stock was down 4.7 percent 2.459 euros at 0937 GMT, while SolarWorld was up 1.15 pct at 10.53 euros.
Solar stocks have surged following the nuclear crisis in Japan on hopes that the rise of renewables would pick up pace, even as governments in Italy and Germany, the world’s two largest solar markets, have cut back support for the sector.
Solar companies have consequently looked for growth abroad, particularly in the United States market, which, according to EPIA, could become the world’s third-biggest market this year.
Q-Cells said it now aimed for stable sales in 2011 compared with 2010, when revenues reached 1.35 billion euros ($1.94 billion), but that goal depends on demand picking up in the second half of 2011. It previously aimed for full-year sales of 1.3-1.5 billion euros.
First Solar, the world’s largest solar company by market value, and Norway’s Renewable Energy Corporation (REC), have also warned of a difficult year.
SolarWorld, in contrast, kept its forecast for this year, expecting sales to rise, after posting a first-quarter net profit of 12.5 million euros, beating the 8.1 million average forecast in a Reuters poll of analysts.
Q-Cells posted a bigger-than-expected net loss of 41.1 million euros for the first quarter, compared with the average estimate in a Reuters poll for a net loss of 24.3 million euros.
(Editing by David Cowell and Will Waterman)