LDK Solar Co., the world’s second-largest maker of solar wafers, fell after high polysilicon production costs and falling prices contributed to a first-quarter loss that exceeded expectations.
LDK Solar’s American depositary receipts, each worth one ordinary share, fell 5.9 percent to $1.90 at the close in New York, the most since June 22.
The company reported a net loss of $185.2 million, or $1.46 an ADR, compared with net income of $135.4 million, or 95 cents, a year earlier, Xinyu, China-based based LDK said today in a statement. Analysts had expected a loss of $1.14 an ADR, the average of three estimates compiled by Bloomberg.
Almost half of that loss came from an inventory writedown and “a provision for firm purchase commitment” of $91.1 million in the quarter, the “result of the relatively high production cost for polysilicon” and falling prices for solar panels, wafers and polysilicon, according to the statement.
LDK said it can make polysilicon, the main raw ingredient in solar cells, for about $41 a kilogram. The current spot price is $22.63, according to data compiled by Bloomberg.
That’s one of the highest costs in the industry, Bloomberg New Energy Finance estimated in an May research note. Hemlock Semiconductor Corp., the largest U.S. provider, had variable production costs of about $25 a kilogram and GCL Poly Energy Holdings Ltd., China’s biggest polysilicon company, had costs of less than $20.
“Industrywide overcapacity continued and drove price declines across the entire solar supply chain, which significantly reduced our revenue and negatively impacted our margins,” Peng Xiaofeng, LDK Solar’s chairman and chief executive officer, said in the statement.
LDK put aside $5.7 million in the quarter as a provision for the tariff announced May 17 by the U.S. Department of Commerce on imported Chinese solar cell.