LDK Solar Cuts 5,554 Workers Amid Clean-Energy Shakeout
LDK Solar Co., the world’s second-largest maker of wafers, cut 5,554 workers this year after plunging prices cut margins to record lows amid a shakeout that’s claimed thousands of renewable-energy jobs.
LDK, which reported the lowest margins among its publicly traded peers, has cut its staff about 22 percent to 19,195 workers since the end of 2011, Chief Operations Officer Tong Xingxuesaid on a conference call today. The Chinese maker of polysilicon, wafers and solar panels has pared a third of its workforce since July, when it peaked at more than 28,000, in reaction to the “highly competitive” solar market.
Solar manufacturers from China to the U.S., such as First Solar Inc. (FSLR), are under pressure after oversupply in all parts of the supply chain depressed prices. Since September, the spot price of polysilicon has fallen by a third, wafers are 35 percent lower and silicon-based solar panels are 25 percent cheaper, Bloomberg New Energy Finance data shows.
“The solar industry experienced a tremendous supply and demand imbalance throughout the value chain during the fourth quarter,” LDK’s Chief Executive Officer Peng Xiaofeng said in a results statement. “In 2012, we expect that excess capacity and further policy uncertainties in Europe and the U.S. will result in continued intense competition within the solar industry.”
Other renewable-energy companies are eliminating employees. First Solar, the biggest maker of thin-film solar panels, announced April 17 plans to cut about 30 percent of its workforce, or 2,000 jobs. The Tempe, Arizona-based company is closing a factory in Germany and will idle production lines in Malaysia.
Vestas Wind Systems A/S (VWS), the largest turbine maker, is firing about about 10 percent of its staff, or 2,335 employees. The Aarhus, Denmark-based company may announce further cuts this year if U.S. lawmakers don’t extend incentives that are set to expire Dec. 31.
LDK reported an operating margin of minus 126.5 percent and a gross margin of minus 65.5 percent due to a “significant” drop in prices, according to the statement released today. Margins were positive a year ago and at least minus 16.3 percent in the third quarter.
The decline in prices led to a net loss of $588.7 million for the quarter, compared with a net income of $145.2 million a year ago. Inventory writedowns and provisions for purchases totaled $232.6 million, while “doubtful” receivables and prepayments required a $179.2 million provision, LDK said.
The company’s margins were the lowest among the companies in the Bloomberg Large Solar index, which tracks the biggest listed players in the industry. In the fourth quarter, operating and gross margins for these companies averaged minus 36.4 and minus 7.6 percent, respectively.
LDK’s American depositary receipts gained 7.4 percent to $3.18 at the close in New York. Each receipt is worth one ordinary share.
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