LDK Solar Expects a Return to Profit After EU Trade Deal
LDK Solar Co. (LDK), the Chinese solar-panel maker that’s reported eight straight quarterly losses, expects to return to profit this year on domestic demand and as a tariff deal promises better sales in Europe.
The company, which is scheduled to report second-quarter earnings on Aug. 14, started generating positive cash flows from selling wafers used in solar cells in June, President Tong Xingxue said in an interview at his Xinyu office.
“This is the first time in two years we witnessed obvious improvement,” he said. “The market is steadily rising and our demand has exceeded supply. The basic barrier to Europe has been overcome” and the domestic market is taking off, he said.
LDK’s debt rose to $2.9 billion as of the end of the first quarter after a supply surplus drove a 20 percent drop in module prices last year. Sales are set to improve after European Union and Chinese negotiators struck an agreement last month to curb EU imports of solar panels in exchange for exempting the shipments from punitive tariffs.
“The oversupply is easing in 2013 and some top solar manufacturers can even make profits in the second half,” Lian Rui, an analyst at NPD Solarbuzz in Beijing, said by phone.
The solar market is becoming more diversified, with demand seen in Japan，China，Europe and Australia, and emerging markets including Africa，the Middle East and Thailand, Tong said in the Aug. 8 interview.
“LDK will have half of its market in China，with the rest abroad,” Tong said. He expects module prices to increase in the second half.
LDK’s wafer production is operating at almost full capacity of 4.5 gigawatts from about 30 percent capacity at the beginning of the year, Tong said. The company has kept almost no inventory for the last two quarters, he said.
LDK plans to revive production at its polysilicon plants once prices reach at least 140 yuan ($23) a kilogram from about 120 yuan now，Tong said.
The company also plans to develop 600 megawatts of solar farms this year once it secures buyers, Tong said.
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