Suntech Power Holdings and Trina Solar reported larger first-quarter losses than analysts estimated as oversupply in the solar panel manufacturing industry depressed profit margins.
Suntech, the biggest manufacturer of panels, said today it had a loss of 74 cents a share, worse than the 49-cent average estimate in a Bloomberg survey. Trina, the fourth-largest maker, reported a 42-cent American depositary receipt loss, trailing forecasts of 27 cents. Both solar companies have now had losses for at least three consecutive quarters.
Photovoltaic panel makers boosted production capacity at the same time that subsidies for the technology were cut in Germany and Italy, reducing demand in the two largest solar markets. That slashed panel prices by 47 percent last year, sending a dozen manufacturers into administration.
“Continued module price declines adversely impacted our profitability despite significant cost improvements,” Jifan Gao, chairman and chief executive officer of Suntech, said in a statement. “We see further signs of industry consolidation.”
Trina reported a net loss of $29.8 million for the quarter, better than the previous quarter, while Suntech’s loss widened to $133 million. Suntech’s operating margin worsened to minus 29.1 percent from minus 10.2 percent, it said today in a statement. Trina’s margin improved to minus 11.4 percent, compared with minus 14.4 the previous quarter.
Trina’s shares rose 0.8 percent to $5.37 at 12:43 pm in New York trading while Suntech’s stock fell 3 percent to $1.92, its lowest value in more than seven months.
Shipments, provisions
Both companies maintained their increased guidance for module shipments for the full-year even if they shipped less in the first quarter, reducing revenue. Suntech expects a 20 percent increase in shipments in the second quarter while Trina sees a 34 percent rise to 500 megawatts to 520 megawatts.
Suntech and Trina said gross margins were affected by provisions for preliminary US anti-dumping and countervailing tariffs. Suntech’s provisions were $19.2 million and Trina’s $26.2 million.
