JA Solar plunges as 2Q loss grows, outlook cut
JA Solar Holdings Co. Ltd.'s second-quarter loss widened from a year earlier, the company said Wednesday, as it became the latest victim of turmoil in the Chinese solar panel industry.
JA also lowered its outlook for the year, and its stock, which trades as American depositary shares on the Nasdaq, plunged 10 percent in midday trading.
The results are another hit for a beleaguered solar industry. China's solar companies grew quickly over the past decade, selling to the U.S. and Europe as they invested in renewable energy. But losses have grown In recent months because of low prices and soft demand.
JA Solar's net loss in the quarter widened to RMB 457.8 million ($72.1 million), or RMB 2.34 (37 cents) per ADS, from RMB 228.9, or RMB 1.39 per share, in the same period a year earlier.
The company reported foreign exchange charges of RMB 69.8 million and tax expenses of RMB 120 million.
Revenue fell 32 percent, to RMB 1.8 billion ($284.4 million).
The loss was far more than Wall Street expected. Analysts surveyed by FactSet forecast a loss of 13 cents per share. Revenue was in line with analysts' expectations for $283.9 million.
Prices for solar panels have fallen off a cliff as the Chinese government pushed hundreds of small players into the industry. New companies still were springing up in 2011 even after Western countries, hammered by the global crisis, cut subsidies. Supplies surged as sales growth stalled, forcing sellers to slash prices to unprofitable levels.
Since 2010, the price of polysilicon wafers used to make solar cells has plunged by 73 percent, according to Aaron Chew and Francesco Citro, analysts for Maxim Group. The price of cells has fallen by 68 percent and that of modules by 57 percent.
That was a big factor in JA Solar's revenue decline, although the company shipped enough solar panels to generate 418 MW (megawatts), up from 401 MW in the second quarter of last year. JA expects to ship 350MW to 370MW in the current quarter. It lowered its full-year outlook to 1.5GW (gigawatts) to 1.8GW from 1.8GW to 2 GW.
Aside from the wrenching pricing war afoot in the Chinese solar industry, JA Solar faces possible anti-dumping tariffs in the U.S. and Europe. Governments have complained that Beijing improperly subsidizes companies, allowing Chinese suppliers to sell abroad at unfairly low prices.
In July, a group of 25 producers of solar gear including companies from Germany, Italy and Spain filed an anti-dumping complaint with the European Union. Chinese companies warned that Beijing would retaliate, possibly triggering a trade war.
The industry's financial problems are likely to force painful changes, including mergers, bankruptcies, factory closures or layoffs, industry analysts say.
Five major Chinese manufacturers, including industry leaders Suntech Power Holdings Ltd. and Yingli Green Energy Ltd., have already reported total losses of nearly $250 million in the latest quarter. One of them, LDK Solar Co., also reported an eye-popping loss of $588.7 million the previous quarter.
JA Solar shares fell 11 cents, or 10 percent, to 96 cents in midday trading. The stock has traded between 89 cents and $3.77 in the past 52 weeks.