Falling Panel Prices Hit JinkoSolar and GCL-Poly Earnings

Chinese solar companies JinkoSolar Holding Co. (JKS) and GCL-Poly Energy Holdings Ltd. (3800) reported losses that were larger than analysts estimated as product prices declined.

JinkoSolar, a panel maker, reported second-quarter net loss of 310.5 million yuan ($48.9 million), compared with net income of 235.2 million yuan a year earlier, according to a statement today. GCL-Poly, which makes wafers, reported a loss of HK$330 million ($43 million) for the six months ended June 30, compared with a HK$3.55 billion profit a year earlier, GCL-Poly said today in a Hong Kong stock exchange filing.

Global prices for solar panels have dropped 37 percent in the past year because of oversupply, according to Bloomberg New Energy Finance. Wafer prices have dropped 44 percent this year while the average spot price of polysilicon, the raw material for most solar panels, is down 23 percent, Bloomberg New Energy Finance data shows.

“I don’t think the worst is behind the whole group,” Mark Bachman, an analyst at Avian Securities LLC in Boston, said in an interview today. While pricing pressure will abate next year, there are “still average selling price declines in front of them,” Bachman said.

JinkoSolar, based in Jiangxi, China, was expected to lose 198.8 million yuan, the average of two estimates compiled by Bloomberg. GCL-Poly was expected to earn HK$32.7 million according to three estimates.

‘Sincere Apology’

The 17-member BI Global Large Solar index has fallen 64 percent (BISOLAR) in the past year as companies deal with the oversupply that’s pulled down prices. Cyclical oversupply, the European debt crisis and European solar subsidy policy changes has affected GCL-Poly’s performance, the Hong Kong-based company said. GCL-Poly Chairman Zhu Gong Shan offered his “sincere apology” for the company’s results during a conference call today.

Average panel prices fell to 74 cents a watt in the quarter, Zhang Longgen, JinkoSolar’s chief financial officer, said on a conference call today. He didn’t give an earlier price. JinkoSolar’s production costs fell to 66 cents a watt from 74 cents in the prior quarter. GCL-Poly’s average selling price of wafers was 27 cents a watt for the first half 2012.

“We are confident the worst is behind us,” JinkoSolar Chief Marketing Officer Arturo Herrero said on the call. Lower prices aren’t sustainable, he said.

GCL-Poly agrees that pricing declines may slow. “The market price may be stabilizing in the second half,” Zhu Yu Feng, executive director of the company, said on a conference call today. Next year “will be the turning point” and 2013 will be “another growth year,” he said.

JinkoSolar’s American depositary receipts fell 0.7 percent to $2.95 at 1:13 p.m. in New York. Each ADR is worth four ordinary shares. GCL-Poly, which reported after the close in Hong Kong, rose 2.5 percent to HK$1.23.

To contact the reporter on this story: Ehren Goossens in New York at egoossens1@bloomberg.net

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

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