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:

Reuters Showcase

Land Ordinance

Land Ordinance

Modi says willing to make changes in land decree  Full Article 

Sahara Woes

Sahara Woes

SEBI cancels Sahara's portfolio management licence  Full Article 

Gold Demand

Gold Demand

India gold demand muted, eyes cut in import duty  Full Article 

Coffee's Hot

Coffee's Hot

IPO could value Cafe Coffee Day at $1 billion  Full Article 

Sahara Salaries

Sahara Salaries

Some staff say Sahara has not paid salaries for months   Full Article 

DLF Fined

DLF Fined

DLF says reviewing $8.4 million SEBI penalty  Full Article 

GM Corn

GM Corn

Monsanto says GM corn trial in final stage in India  Full Article 

Rail Budget

Rail Budget

Breakingviews - India goes back to future with $137 bln rail push  Full Article | Full Coverage 

Clean Energy

Clean Energy

India says clean energy a $160 billion opportunity over five years  Full Article 

Reuters India Mobile

Reuters India Mobile

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