Q-Cells SE, the world's biggest maker of solar cells, withdrew its full-year sales outlook and said it saw no signs of an upturn, in a surprise move that sent shares across the sector lower.
Along with peers in the once-booming industry, Q-Cells has been hit by a steep decline in prices for solar cells, mainly caused by an oversupply that built up during the boom years of 2007 and 2008.
The funding-hungry sector, has also been hurt by the global credit squeeze, making refinancing difficult.
Q-Cells recently had to raise 780 million euros ($1.09 billion) in cash by issuing a convertible bond as well as selling a 17.2 percent stake in Norwegian peer REC.
The prolonged weak development of the global photovoltaic markets has continued to negatively impact the business development of Q-Cells SE in the second quarter, the company said as it released results.
Q-Cells, which in May slashed its 2009 sales outlook for the third time in six months, said it no longer expects sales to reach 1.3 billion to 1.6 billion euros, adding that it is was not possible to make a reliable forecast.
Earlier this month, the company said it was not planning to issue a profit warning, denying market talk that had driven shares down.
Shares in European solar stocks fell on the news, with Q-Cells leading the pack, down 15.8 percent, while peers SolarWorld, Solon, and Phoenix Solar were all down 1.6 to 3.1 percent.
Shares in REC fell up to 3 percent before gaining 0.2 percent, after it said a recent rights issue was 60 percent oversubscribed, while PV Crystalox was 3.1 percent lower.
A HUGE DISAPPOINTMENT
The (Q-Cells) numbers are a huge disappointment. After the departure of CFO Schuening a few weeks ago, the company strongly denied that this had something to do with weak Q2 results, DZ Bank analyst Sven Kuerten wrote in a note, referring to the finance director who resigned in June.
The move also raises questions about whether the industry will recover in the second half, an outlook widely expected by Q-Cells as well as peers such as Conergy and module maker Aleo Solar following stimulus packages in the United States and China.
Q-Cells's warning, a recent profit warning from industry bellwether Phoenix Solar as well as negative statements by LDK Solar have raised concerns that such a positive outlook might not be based on concrete evidence.
(The case of) Q-Cells is more problematic since it suggests the company has problems with the Asian competition that can produce at much lower prices, said Philippe de Weck, fund manager at Pictet, who is managing the company's Clean Energy fund.
Nedim Cen, who took over as chief financial officer from Hartmut Schuening at Q-Cells last month, said sales would remain under pressure in the second quarter.
Regarding prices, we expect a very tough environment (in the second half of the year), he told a conference call.
However, the chief executive of SolarWorld, Frank Asbeck was more positive, saying he did not expect any nasty surprises in its financial results.
Q-Cells -- which competes with Japan's Sharp Corp and Kyocera -- said second-quarter sales fell to 142 million euros from 310 million a year ago.
It posted a loss before interest and tax of 62 million euros, down from a profit of 60 million.
Frankfurt-listed shares of Kyocera fell 0.3 percent while Sharp Corp's Frankfurt-listed shares gained 0.5
percent, albeit at very low volumes.