LDK Solar Co. (NYSE: LDK),the world's largest maker of multicrystalline wafers, is scheduled to release its first-quarter earnings after the closing bell on Monday, May 10, 2010. Analysts, on average, expect the company to report earnings of 1 cent per share on revenue of $325.86 million. In the year ago period, the company posted a loss of 21 cents per share on revenue of $283.26 million.LDK Solar Co., Ltd., through its subsidiaries, engages in the manufacture and sale of multicrystalline solar wafers to the manufacturers of solar cells and solar modules in the People's Republic of China and internationally. The company offers multicrystalline solar wafers between 180 and 220 microns in thickness.
In the preceding fourth quarter, the Xinyu City, China-based company's net loss narrowed to US$7.28 million or US$0.07 per ADS from US$133.09 million or US$1.25 per ADS in the previous year. Excluding one-time items of US$10 million related to the settlement of a class action lawsuit, net income for the quarter was US$2.7 million or US$0.03 per ADS. Revenue declined to US$304.59 million from US$426.61 million in the same quarter last year. Analysts, on average, expected the company to earn US$0.12 per share on revenue of US$301.91 million. Module shipments were 23.2 megawatt in the fourth quarter, up from 9.4 megawatt in the third quarter.
The company's manufacturing cost in the fourth quarter of 2009 declined to approximately $0.32 per watt.
LDK said in February that it remains on track towards its goal of reducing wafer converting cost to as low as $0.25 per watt in the next eight quarters. It reached 1.8 gigawatts wafer manufacturing capacity at the end of the fourth quarter of 2009 and recently increased its annual production capacity to 2 gigawatts, becoming the world's first photovoltaic firm to reach this level.
It expects all first quarter 2010 wafer shipments to be in the range of 370 megawatts to 400 megawatts and module shipments to be in the range of 25 megawatts to 30 megawatts. Revenues for the first quarter 2010 is expected to be in the range of $310 million to $330 million. It also expects to see an improvement to our profitability in the first quarter.
The solar industry has undergone significant changes in the past few years. The industry suffered heavily during recession as turmoil in the credit market forced financial players to abandon U.S. solar energy projects. The 2008 collapse of top solar financier Lehman Brothers and the freeze-up in the global credit markets drove nearly all banks to halt funding for major new solar projects, forcing the makers of systems that turn sunlight into electricity to cut prices for their products and sending their stocks crashing. The problems of solar companies had been further compounded by an oversupply of polysilicon, a material used in solar panels.
Globally, solar industry depends upon government subsidies and incentives and support to remain competitive. However, recent developments suggest that subsidies will inevitably be reduced or phased out. Evergreen Solar sells bulk of its panels in key European markets like Germany and Spain, where generous federal subsidies ensured high electricity rates for solar energy system. In Germany, Solar subsidies for rooftop-installed solar power will see a one-off cut of 16 percent from July, while most open-field installations will be cut by 15 percent.Support for farmland solar systems is to be scrapped completely, according to media reports.
However, the industry as a whole is likely to benefit from growing attention to global warming, skyrocketing oil prices, cheap financing and technological advances. At the Copenhagen Summit held in December 2009, the five major polluters of the world agreed to take action to reduce CO2 aggressively, with $100B per year pledged to help developing nations adopt green energy technology to cut greenhouse gas. Meanwhile, the US, China, Brazil and India continue to invest heavily in wind and solar energy with China's $454B in the next 5 year period as the most aggressive one. As part of the stimulus bill signed last year, the federal government approved around $60 billion in loan guarantee authority and $30 billion in energy grants for renewable energy and transmission companies. Congress has also granted a 30% renewable-investment tax credit to help expand the development of alternative sources of energy. As of February this year, the industry had gotten Treasury grants worth $81 million. That grant program is scheduled to end Dec. 31. The industry is still hoping that Congress will approve further policies to aid solar.
Thanks to better cost advantages, Chinese solar module maker have grabbed more market share from their international competitors. Local solar companies have also benefited from China's well-developed supply chain, cheap electricity, supportive policies and even low environmental standards.
In terms of stock performance, LDK solar shares have lost nearly 36 percent over the past year.
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