Three of the world's top solar power companies on Tuesday offered a dour view of the industry as it struggles with a dearth of funding options for new projects that has driven up supplies and sent prices on solar panels falling.
Germany's Q-Cells cut its 2009 sales outlook for the second time since December, Solon SE withdrew its 2009 forecast, and U.S. thin-film company First Solar Inc painted a bleak picture of the industry due to frozen credit markets that are hampering new projects, a weak dollar that is squeezing profits and a risk of mounting inventories.
The short-term outlook for the solar industry, in our view, has never looked more difficult, First Solar Chief Executive Mike Ahearn said on a conference call with investors to discuss the company's quarterly results.
Tempe, Arizona-based First Solar has been a favorite among investors in alternative energy since it went public in 2006. Its thin-film, photovoltaic solar cells are cheaper to produce than the silicon-based cells that dominate the market.
Nevertheless, the company's stock slid 12.8 percent to $119.97 in extended trade though First Solar had earlier posted a fourth-quarter profit and revenue that blew past analysts' estimates.
Unlike many of its rivals in the industry, First Solar maintained its revenue outlook for the year. However, executives painstakingly outlined myriad risks to the forecast.
First Solar said it would begin investing in solar projects itself, meaning about $200 million of its 2009 revenue would be deferred. Excluding that deferral, it expects revenue of $1.8 billion to $1.9 billion for the year. It had previously forecast $2 billion to $2.1 billion.
The company also said it would cut prices for its products selectively to spur growth in new markets. In addition, it warned that it could see some inventory buildup in the first half of the year and said it had identified 10 to 15 percent of its 2009 volumes that could be at risk of customer defaults.
They painted a pretty somber picture, ThinkEquity analyst Jonathan Hoopes said of First Solar's conference call. This was a very cautious outlook, so while they maintained it, they did so with all the proper hedges.
CREDIT RELIEF, BUT DOUR SALES VIEWS
Q-Cells, the world's largest maker of solar cells, said it had gotten some relief from the credit crisis by getting an extension on a bridge loan.
A 750 million euros ($961 million) loan -- which expires on March 31 and of which Q-Cells has drawn 250 million -- will be extended until the end of December via a bridge financing package of 500 million euros.
The company also announced it is planning to secure its long-term financing to replace or avoid the bridge financing through a bonded loan with a volume of about 500 million euros that would run until mid-2011.
Q-Cells Chief Financial Officer Hartmut Schuening said that the bonded loan is to be completed by the end of the first quarter of 2009, but added that the company will need additional financing in the mid to long-term.
Despite cutting its sales outlook for the year, shares of Q-Cells ended the day 7.6 percent higher on rumors it may merge with Norway's Renewable Energy Corp.
The deputy chief executive of REC said he had no knowledge of what was behind the merger rumors, while a Q-Cells spokesman said the company would not comment on market rumors.
Q-Cells's solar module-making peer Solon withdrew its 2009 outlook, driving its shares down 5.3 percent.
The company said: Because of the difficult economic situation and the development of key markets (U.S., southern Europe) which cannot yet be reliably estimated, the visibility for the current year continues to be limited.
(Reporting by Nichola Groom; Additional reporting by Anneli Palmen; Editing by Gary Hill)