UPDATE 2-SolarWorld slashes outlook on Chinese price war

Mon Aug 13, 2012 1:54pm IST

Related Topics

Stocks

   

* No longer sees positive EBIT in 2012

* H1 sales 340 mln eur vs 534 mln year ago

* H1 EBIT loss 144 mln eur vs 70 mln profit year-ago

* Shares fall 12 percent

By Christoph Steitz

FRANKFURT, Aug 13 (Reuters) - Germany's SolarWorld slashed its outlook for the current year, accusing Chinese peers of unfairly undercutting the prices of its components which pushed the company to a surprise first-half operating loss.

The solar industry is grappling with fierce competition, falling government subsidies for solar energy and oversupply - a deadly combination that has already claimed large players such as U.S.-based Solyndra and Germany's Q-Cells.

Western solar companies have been at odds with their Chinese counterparts for years, alleging they receive lavish credit lines from state-backed banks allowing them to sell at cheaper prices, while European players struggle to refinance.

Chinese companies have repeatedly dismissed such claims, warning any punitive action would harm the industry as a whole and trigger a trade war between China and the European Union as well as the United States.

SolarWorld said on Monday it would not be able to generate positive earnings before interest and tax (EBIT) in 2012, because of "the aggressive market situation characterised by illegal trade practices".

The company, which makes components for solar panels that convert sunlight to electricity, reported a first-half operating loss of 144 million euros ($177.3 million) compared with a 70 million profit a year ago.

"These are some bad numbers and the huge loss came out of the blue. You can see that the sector's crisis leaves its mark everywhere," a trader said.

Calling the results "catastrophic", DZ Bank analyst Sven Kuerten kept a "sell" rating on SolarWorld, whose shares were about 12 percent lower at 0815 GMT.

Last month a group of solar companies, led by SolarWorld, filed an anti-dumping complaint against Chinese rivals with the European Commission. That followed a similar move in the United States which led to the world's largest economy imposing duties on solar panel imports from China. ID:nL6E8IPBD9]

"Chinese manufacturers are breaking the rules and waging a trade war. Something has to be done to fight their illegal dumping practices," Chief Executive Frank Asbeck said in a letter to shareholders.

Following the U.S. government's decision in May, 59 Chinese solar companies face an import duty of about 31 percent, including Yingli Green Energy, LDK Solar, Canadian Solar, Hanwha Solar One, JA Solar Holding and Jinko Solar.

"The question is whether all those anti-dumping complaints will achieve anything. To me, it looks as if the industry is clinging to straws," the trader said.

FILED UNDER:

Reforms Push

REUTERS SHOWCASE

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

26/11 Plotter

26/11 Plotter

Pakistan to challenge bail for Mumbai attack "mastermind".  Full Article 

Chinese Economy

Chinese Economy

China revises up size of 2013 economy, sees no effect on 2014 growth.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage