Global Woes Continue with LDK Solar's Quarterly Earnings

Renewable Energy World Editors
April 30, 2012 | 5 Comments

China's LDK Solar became the latest company to detail symptoms of the drag caused by oversupply and falling subsidies as it reported mounting losses for the fourth quarter of fiscal 2011.

The world’s second largest maker of solar wafers turned in another quarterly loss, and the numbers show how difficult 2011 was compared to the previous year. According to its earnings report, LDK’s loss from operations for the fourth quarter of fiscal 2011 was $531.4 million. In the third quarter of 2011, it reported a loss from operations of $77.1 million. Those numbers pale in comparison to the company’s income from operations of $203.8 million for the fourth quarter of fiscal 2010.

The operating margin for the fourth quarter of fiscal 2011 was negative 126.5 percent compared to negative 16.3 percent in the third quarter of fiscal 2011, and positive 22.1 percent in the fourth quarter of fiscal 2010. LDK’s net sales were the fourth quarter were $420.2 million, less than half of the volume from the same period a year earlier.

The company cited many of the forces blamed for the recent struggles of key players in the global solar industry.

"The solar industry experienced a tremendous supply and demand imbalance throughout the value chain during the fourth quarter. Our results reflected the negative effects of this dislocation in the PV market," said CEO Xiaofeng Peng. "Weak market demand and rapidly declining average selling prices reduced our revenue and adversely impacted our margins in the quarter.

"In 2012, we expect that excess capacity and further policy uncertainties in Europe and the U.S. will result in continued intense competition within the solar industry. As such, we remain focused on improving our cost structure by driving down production costs and closely managing our operating expenses.”

In its conference call later in the day, LDK addressed how the losses are impacting its workforce, which peaked at about 28,000 employees in July of last year. The company now employs 19,195 workers, with about 5,500 of those cuts coming since the end of 2011.

Shares dropped sharply on the earnings news early Monday but rebounded strongly in late-day trading, pushing well past $3. In 2007, LDK shares reached a high of more than $75.

5 Comments

BaBa Gates
May 2, 2012

You are all right. Renewable is at the its dawn, conservation before renewable energy is the first step and China selling below cost is not a sustainable business model.

The problem is renewable needs efficient storage before it can be reliable energy source, no one hypes conservation because it is not sexy, and china's government sponsored solar manufactures have distroyed the rest of the worlds capacity in the process building their unsustainable solar industry.

Beyond the above we have a bunch of nut cases like Al Gore and Hollywood running around using fever the sale their businesses to our kids through the schools.

We need a honest discussion of the environment and energy so our kids and grand kids will have the life we have or better. Not hollywood hype and got you politics. I know human nature is to feel good when we think we are helping to solve a problem but the problem has to be real not manufactured by fear mongers.

randy velker
May 2, 2012

As we get more and more information from the Chinese module manufacturers it becomes apparent that slapping a tariff on top of this cut throat competitive market is adding insult to injury.

They laid off 11,000 workers so far and we want to further "punish" them for the low prices that they are already providing.

Making modules is for big boys with thick skin. Margins are razor thin (potentially non-existent)...and we are waiting on the Trade Commission's upcoming announcement on potentially slapping even more fines on them for "dumping."

At what point does it becomes "racist" to punish manufacturers because they simply live/work in another country?

lawrence elliott
May 1, 2012

"Dawn of Renewable energy is yet to even start."

I would have to agree

As to "hype in the industry meeting reality?"

Welcome to reality Sun2Energy. Show me something today that is not hyped.

Another reality is the fact that our entire energy grid and energy use profile, from utility power to transportation in all forms, is just one big 'energy sieve'. Fill it up, watch it all run out the bottom and then keep looking for more supply rather than use a new bucket without holes.

I see so much inefficiency in everything we do,each and every day,that it really is pathetic. Most if not all of the waste of energy goes completely unrecognized by most since we have all become numb to it. We still think an incandescent light bulb has a place in our home and businesses. That's just for starters.

I was asked to quote a PV system for a new restaurant (fast food 'pig trough' so calling it a restaurant is a stretch)

I refused to participate. Just the excessive south facing windows (lousy commercial aluminum)with no shading or overhang would use most if not all the PV power just for air conditioning. That is insane and not something I want to be party too. This goes on all the time.

Just a minor effort in real efficiency would generate more employment than solar and wind combined and the positive results would be staggering.

Amet Kianin
May 1, 2012

Sun2energy,<< its not renewable energy meeting reality, it is Neolithic Technology (PhotoVoltaic) waking up to reality..Dawn of Renewable energy is yet to even start.

BaBa Gates
May 1, 2012

Another example of the hype of renewable energy meeting reality.

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Renewable Energy World's network editors help deliver the most comprehensive news coverage of the renewable energy industries. Based in the U.S. and the UK, the team is comprised of editors from Pennwell Corporation's myriad of publications...