Yingli, Renesola Cut Forecasts, Take Charges in Solar Slump

Yingli Green Energy Holding Co. and Renesola Ltd. (SOLA), two Chinese solar companies, reduced their forecasts for shipments and cut the estimated values of their inventories.

Yingli will deliver 1,580 to 1,630 megawatts of photovoltaic modules in fiscal 2011, lower than the previous forecast of 1,700 to 1,750 megawatts, the Baoding, China-based company said today in a statement. In a separate statement, Jiashan-based Renesola cut its quarterly shipment estimate to 320 megawatts to 330 megawatts, from 330 megawatts to 350 megawatts.

Yingli incurred a $40 million cost to cut the value of its inventory, while Renesola wrote down $19.4 million. Both slashed margin forecasts. Last week, SunPower Corp. (SPWRA) and First Solar Inc. (FSLR), the two largest U.S. solar manufacturers, lowered their forecasts, as did polysilicon-maker MEMC Electronic Materials Inc. (WFR) and China Sunergy Co. Three U.S. solar companies including Solyndra LLC have filed for bankruptcy this year.

“The solar manufacturing bubble has burst, consigning many producers who cannot keep up to history,” Martin Simonek, an analyst in London with Bloomberg New Energy Finance, said in an e-mail. “Policy changes across all key markets in Europe have limited demand growth for PV products in 2011,” while an increase in production has led to excess supply, he said.

More Reduced Forecasts

Other solar companies, including LDK Solar Co. and JA Solar Holdings Co. are also likely to reduce their forecasts, Aaron Chew, an analyst at Maxim Group LLC in New York, said in a research note today. “Losses are likely” in the third quarter, and in the fourth quarter “they are almost a certainty for the group,” he said.

Yingli’s shares fell 1.1 percent to $3.73 in New York today. They’ve fallen 71 percent in the past 12 months ending today. Renesola shed 4.6 percent to $2.26, and has now lost 83 percent of its market value over the same period.

Solar companies around the world are cutting profit forecasts as plunging prices spurred on by a surge in Chinese manufacturing capacity crimps margins.

Yingli said its gross margin in the third quarter after accounting for the inventory writedown will probably be 10 percent to 11 percent, down from previous forecast of the “middle-to-high” teens. Renesola said its gross margin after the writedown will probably be minus 3 percent to minus 5 percent, down from a previously predicted range of 6 percent to 8 percent.

Weak Demand, Oversupply

“Weak market demand and industry oversupply continued to affect our business in the third quarter,” Renesola’s Chief Executive Officer Xianshou Li said in the statement. “We expect the challenging conditions in the global solar market to continue in the fourth quarter of this year, as well as into the first quarter of next year. We believe that conditions should improve later in 2012.”

Separately, data released today by New Energy Finance showed that spot prices of polysilicon, the raw material used in most solar panels, declined 4 percent from last week, to $33.03 a kilogram.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Ehren Goossens in New York at egoossens1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.