| SunPower, MEMC offer hope of solar recovery By Nichola Groom
LOS ANGELES (Reuters) - U.S. solar companies SunPower Corp and MEMC Electronic Materials Inc on Thursday offered hope that the beleaguered solar industry is on the mend, each posting quarterly earnings and giving revenue outlooks that topped Wall Street estimates. Chinese solar player LDK Solar Co Ltd also weighed in with positive news, raising its second-quarter forecasts for both shipments and revenue. "This is a lot better than what many were anticipating," Wedbush Morgan analyst Al Kaschalk said of SunPower's results, which blew past analysts' expectations and prompted the biggest U.S. panel maker to raise its 2009 revenue range. The company's stock soared 19 percent in extended trade to $29.50 after closing at $24.84 on the Nasdaq. A dearth of financing for renewable energy projects combined with a pullback in solar tax breaks in Spain have led to a flood of solar panels on the market, driving down prices and profits across the industry. After a dismal first quarter, however, the market proved to be stronger than expected last quarter, SunPower said. "Demand was better than we expected in most regions," SunPower Chief Executive Tom Werner said on a conference call with analysts. Second-quarter net income fell 22 percent to $24.2 million, or 26 cents per share, compared with $31.2 million, or 37 cents per share, a year ago. Excluding one-time items, the company earned 24 cents a share, topping Wall Street analysts' average estimate of 15 cents a share, according to Reuters Estimates. The San Jose, California, company said it benefited from improved sales of residential and smaller commercial systems in California, where it gained market share, as well as a 23 percent reduction in inventories and other cost controls. In addition, Werner said in an interview that SunPower has "a number" of power plant-scale projects in both Italy and the United States that are in the process of being financed and should drive results for the rest of this year. The company expects third-quarter revenue and earnings per share to be up 40 percent from the second quarter. MEMC, LDK GIVE STRONG SALES VIEWS MEMC's results were more mixed. The silicon maker's quarterly profit also topped estimates on stronger-than-expected revenue, though gross margins were below expectations, according to Jefferies & Co analyst Paul Clegg. The company, which makes the key raw material in solar panels and semiconductors, also forecast third-quarter revenue that exceeded Wall Street analysts' average view, though it said margins would be up only modestly. The St. Peters, Missouri-based company, which has been hurt by a sharp drop in silicon prices, said sales to the semiconductor industry were helped by stronger demand from Asia and inventory replenishment. Solar demand remained restrained, however, MEMC said, though the company added several new solar customers during the quarter. "We are in a recovery, we just don't know how steep the climb is going to be," Clegg said. "But we are on the way." Silicon prices went as high as $500 a kilogram last year due to shortages as solar manufacturers scrambled to buy supplies. But new production capacity and shrinking demand has pushed those prices near the $50 mark in recent weeks, and MEMC has been forced to renegotiate long-term contracts with customers including China's Suntech Power Holdings Co Ltd and Taiwan's Gintech Energy Corp. MEMC also said that during the quarter it reached a deal with German solar cell maker Q-Cells to form a joint venture to construct and sell solar power plants. MEMC will invest up to $100 million in the venture this year. MEMC shares were down 1.4 percent after-hours at $20.57 after closing at $20.86 on the New York Stock Exchange. Finally, solar wafer maker LDK late on Thursday raised its revenue and shipment forecast for the second quarter but said it expected to take a write-down of $150 million to $160 million for a decline in the value of its solar wafer inventories. As a result, the company expects to post a quarterly net loss of $180 million to $200 million. LDK will report quarterly results on August 12. LDK shares rose to $10.35 after closing at $10.30 on the New York Stock Exchange. (Reporting by Nichola Groom; Additional reporting by Matt Daily in New York and Braden Reddall in San Francisco; Editing by Gary Hill) |
Saturday, July 25, 2009
SunPower, MEMC offer hope of solar recovery
Wall St. seeks sunny forecasts in solar earnings
| Wall St. seeks sunny forecasts in solar earnings By Nichola Groom and Christoph Steitz
LOS ANGELES/FRANKFURT (Reuters) - Investors are looking for signs of a recovery in solar panel demand when manufacturers report earnings in the coming weeks, though panel prices are still falling fast and earnings may not see a meaningful improvement until 2010. U.S. solar players including SunPower Corp, First Solar Inc and MEMC Electronic Materials are scheduled to report quarterly earnings this week and next, with Chinese and German companies' results also in the offing. Recently, companies including SunPower and Yingli Green Energy Holding Co Ltd have said the solar market turned a corner in the second quarter. Last week, however, the world's top solar cell maker, Germany's Q-Cells, injected fresh nervousness into the market when it withdrew its 2009 outlook -- which it had previously cut three times. Demand for solar panels has suffered this year due to a lack of available financing for renewable energy projects and a pullback in government subsidies in Spain and Germany. That demand slide has lead to a global glut of solar panels that has sent prices tumbling and hampered manufacturers' profits. Second-quarter results from solar companies are expected to be significantly better than the previous quarter, when many reported hefty losses. Analysts are more interested, however, in the manufacturers' outlooks for the remainder of the year. "What will be most important will be management commentary on demand and average selling prices," Simmons & Co analyst Burt Chao said in an interview. "I would expect Q3 demand to improve, and if they talk that down that would be very negative for the stocks." Many companies have said they expect improved financing conditions and funds from the U.S. economic stimulus to boost demand in the second half of this year, yet financing remains tight and government programs have been slow to roll out. In addition, prices on solar panels are still falling. "Many solar companies set expectations for improving demand in the second half of this year," said Gabelli & Co analyst Hendi Susanto. "We believe higher-than-expected price declines will likely overshadow improving volumes." Earlier this week, Bank of America/Merrill Lynch analyst Steven Milunovich downgraded the solar sector to "underweight," citing the risk that demand will not recover as much as expected. He added that this year's rally in alternative energy stocks may be over for the time being as second-quarter results "should be disappointing." SUNPOWER KICKS IT OFF Panel maker SunPower will kick off the solar earnings season after the market closes on Thursday. For SunPower, the market is focused on to what extent the company is feeling pressure from lower-priced Chinese competitors, which could result in steeper-than-expected price declines. Barclays Capital analyst Vishal Shah said in a client note that he expects SunPower to cut its 2009 revenue outlook. SunPower should also offer insight into the global financing environment and outlook for U.S. solar policies. In the first half of August, investors will also hone in on a raft of earnings from solar companies out of Germany -- the world's biggest solar market -- including industry bellwethers such as Conergy AG, SolarWorld and Solon SE. Top German solar company Q-Cells stunned the industry when it forecast a second-quarter loss before interest and tax of 62 million euros ($87.99 million), as the recovery it had hoped for failed to materialize. German cell maker Ersol, owned by the world's largest supplier to the automotive industry Bosch, hit a similar note by substantially cutting its full-year profit outlook. "To me, this (recovery) has been wishful thinking," said Sebastian Growe, analyst at Equinet. "There is a hope among companies, but what strikes me is that this has seldom translated into hard estimates, real numbers." Hopes rest on all-rounders such as SolarWorld, which has so far remained relatively unscathed by the crisis that has hit the sector. German manufacturers' woes may not extend to Chinese counterparts including Suntech Power Holdings Co Ltd, Yingli Green Energy Holding Co Ltd and JA Solar Holdings Co Ltd, analysts said, as price declines on Chinese-made panels were more dramatic earlier this year, when many took hefty inventory writedowns. "With Q-Cells, one of the real key things they said was (prices) have declined a lot faster than we had previously expected," Chao said. "The Chinese manufacturers have taken the (price) declines early on." (Reporting by Nichola Groom, editing by Matthew Lewis) © 2009 Reuters |
Asian Nations Could Outpace U.S. in Developing Clean Energy July 16 2009
American Markets' Slump Feeds Worry
By Steven Mufson
Washington Post Staff Writer
Thursday, July 16, 2009
President Obama has often described his push to fund "clean" energy technology as key to America's drive for international competitiveness as well as a way to combat climate change.
"There's no longer a question about whether the jobs and the industries of the 21st century will be centered around clean, renewable energy," he said on June 25. "The only question is: Which country will create these jobs and these industries? And I want that answer to be the United States of America."
But the leaders of India, South Korea, China and Japan may have different answers. Those Asian nations are pouring money into renewable energy industries, funding research and development and setting ambitious targets for renewable energy use. These plans could outpace the programs in Obama's economic stimulus package or in the House climate bill sponsored by Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.).
"If the Waxman-Markey climate bill is the United States' entry into the clean energy race, we'll be left in the dust by Asia's clean-tech tigers," said Jesse Jenkins, director of energy and climate policy at the Breakthrough Institute, an Oakland, Calif.-based think tank that favors massive government spending to address global warming.
Energy Secretary Steven Chu and Commerce Secretary Gary Locke are visiting China this week to discuss cooperation on energy efficiency, renewable energy and climate change. But even though developing nations refused to agree to an international ceiling for greenhouse gases last week, China and other Asian nations are already devoting more attention to cutting their use of traditional fossil fuels such as oil, natural gas and coal.
South Korea recently said it plans to invest about 2 percent of its GDP annually in environment-related and renewable energy industries over the next five years, for a total of $84.5 billion. The government said it would try to boost South Korea's international market share of "green technology" products to 8 percent by expanding research and development spending and strengthening industries such as those that produce light-emitting diodes, solar batteries and hybrid cars.
China and India are kick-starting their solar industries. India aims to install 20 gigawatts of solar power by 2020, more than three times as much as the photovoltaic solar power installed by the entire world last year, the industry's best year ever. And China's new stimulus plan raises the nation's 2020 target for solar power from 1.8 gigawatts to 20 gigawatts. (A gigawatt is about what a new nuclear power plant might generate.)
"China is trying to catch up in a global race to find alternatives to fossil fuels," the official China Daily said in an article last week.
"A lot of people underestimate how focused China is on becoming a global leader in clean technology," said Brian Fan, senior director of research at the Cleantech Group, a market research firm. China now provides a $3-a-watt subsidy upfront for solar projects, he said, enough to cover about half the capital cost. Fan said it is "the most generous subsidy in the world" for solar power.
China is also expected to boost its long-term wind requirement to 150 gigawatts, up from the current 100 gigawatt target, by 2020, industry sources said. Jenkins said China could provide $44 billion to $66 billion for wind, solar, plug-in hybrid vehicles and other projects. Fan said China also plans to make sure that many of the orders go to its own firms, Gold Wind and Sinovel.
The big Asian research and investment initiatives come as U.S. policy makers boast about their own plans, giving ammunition to those who say this country needs to do more.
"That R&D represents America's chance to become the world's leader in the most important emerging economic sector: energy technology," said House Majority Leader Steny H. Hoyer (D-Md.) in a May 13 speech to the U.S. Chamber of Commerce. "In the years to come, I hope that America will be selling clean technology to China and India and not the other way around."
Confident that the United States will develop top-notch technology, the House voted overwhelmingly on June 10 to oppose any global climate change treaty that weakens the intellectual property rights of American green technology.
"We can cede the race for the 21st century, or we can embrace the reality that our competitors already have: The nation that leads the world in creating a new clean energy economy will be the nation that leads the 21st century global economy," Obama said on June 29.
But countries in Asia are not standing still waiting for U.S. advances.
That both excites and worries U.S. manufacturers torn between opportunity and fear of a boost for Asian competitors at a time when the world's biggest market, the United States, has slowed down sharply. "This is heavy manufacturing business. The U.S. has had a great position over the last several years," said Vic Abate, vice president of renewables at General Electric, the world's number two wind turbine company. "If it slows down and if investment doubles down in China, it will be a lot harder to catch up."
"We have already been left behind in some areas," said Mark Levine, director of the environmental energy technologies division at Lawrence Berkeley National Laboratory. "But . . . there remain many opportunities," he said, adding that "the U.S. can carve out key areas in clean energy technology."
Although GE is the only U.S. company among the world's top 10 wind turbine makers (China has two, Germany has three), Levine said "there are areas in wind energy where we are likely to develop crucial technologies that we will both exploit and likely license to others." He cited advanced materials that would permit stronger rotors and techniques for taking advantage of higher wind speeds at greater heights.
Levine said the United States is unlikely to "become the or even a leading photovoltaic manufacturer. But our scientific talent . . . has a good chance of developing the next-generation PV systems which we could either manufacture in China or another country . . . or license to foreign companies. . . . Even if the manufacturing is done abroad, this will lead to very real and large benefits to the U.S. from licensing fees, not to say sales in the U.S. and elsewhere."
