March 20, 2012 / 11:44 AM / 6 years ago

JA Solar posts loss, eyes emerging markets

(Reuters) - JA Solar Holdings Co Ltd (JASO.O) posted a larger-than-expected adjusted quarterly loss as prices fell and sales slumped, but said demand from emerging solar markets such as the United States, China, India and Japan will boost shipments this year.

Many solar companies reported losses last year as prices for renewable energy systems halved after top consumers Germany and Italy lowered solar subsidies while rising production from China led to a glut.

Surging production from China has also led to a trade war, with a coalition of seven U.S. solar product makers asking for import duties on Chinese-made cells and panels, which they say are subsidized by the Chinese government and “dumped” in the United States at unfairly low prices.

Any duty could weigh heavily on the Chinese companies that are betting big on the U.S. market, the fourth largest.

“Looking to (the) quarter ahead, we are realistic about the challenges facing the industry,” JA Solar Chief Executive Peng Fang said on a conference call with analysts.

The company, like peers Suntech Power STP.N, JinkoSolar Holding (JKS.N), Canadian Solar Inc (CSIQ.O), ReneSola (SOL.N) and China Sunergy Co CSUN.O, forecast higher 2012 shipments.

JA Solar, which posted a loss for the third straight quarter, forecast a sequential drop in first-quarter shipments.

Peng said rooftop installations will drive demand in Japan and China. China’s consumption of solar panels increased nearly five fold last year, making it the third-largest market behind Germany and Italy.

Market experts, however, say any shipment growth driven by emerging markets, where incentives are very low, will not help the companies’ weak margins as they would be forced to sell at lower prices to attract customers.

JA Solar’s high-efficiency products, which command as much as 10 percent premium to conventional cells and panels, help its margins to an extent.

“Management actually noted on the call that average selling prices in China were comparable to those in Europe and the U.S. So I‘m not sure the company’s dependence on emerging markets really hurt them as much,” Raymond James analyst Alex Morris said in an email.

JA Solar’s stock, which has shed 72 percent of its value in the last one year, was down 7 percent at $1.69 on Tuesday on the Nasdaq. The broader MAC Global Solar Energy Index .SUNIDX was down 2.7 percent.

HIGHER SHIPMENTS

    For the full year, JA Solar forecast total shipments of 1.8 gigawatt (GW) to 2 GW, higher than 1.69 GW last year.

    The Shanghai-based company, which produces solar cells and modules, sees shipments of 320 megawatt (MW) to 350 MW for the first quarter, lower than 398 MW it shipped in the fourth.

    “Guidance was slightly underwhelming, as both 1Q12 and 2012 shipments are expected to come in mildly below our previous forecasts,” Raymond James analysts wrote in a note.

    JA Solar reported a fourth-quarter net loss of $68.2 million, or 39 cents per American Depositary Share (ADS), compared with a profit of $118.7 million, or 59 cents per ADS, a year ago.

    Excluding one-off items, it lost 11 cents per share, while analysts had predicted a loss of 9 cents per share, according to Thomson Reuters I/B/E/S.

    Gross margin was 0.5 percent, compared with negative 4.3 percent in the third quarter.

    Revenue fell about 47 percent to $309.1 million.

    Reporting by Vaishnavi Bala and Krishna N. Das in Bangalore; Editing by Don Sebastian

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