Having introduced over 20 new conductive paste-based products for the solar sector in the last 18 months the lack of customer adoption and overall weak demand due to industry overcapacity has forced materials specialist Ferro Corporation to explore strategic options for solar pastes business. As a result of the poor business environment in the PV sector, Ferro revised down its earnings guidance proposing to take an impairment charge of between US$175 million to US$200 million in its financial third quarter of 2012.
“The market for conductive pastes used in the manufacture of solar cells has been particularly challenging for much of 2011 and 2012 as the solar industry struggles with overcapacity and rapidly falling prices for solar power panels,” noted James Kirsch, Ferro chairman, president and CEO. “While we have made some progress in our efforts to develop new customers, the pace at which we have been able to achieve new product qualifications at the larger solar cell manufacturers has been insufficient to generate the sales volume needed to contribute adequate value to our shareholders.”
“We are now exploring strategic options for our solar pastes business in an effort to eliminate its drag on our earnings and cash flow,” added Kirsch in a statement.
Ferro said that the non-cash impairment charge was due to the reduced forecasts of future earnings in its Electronic Materials segment, which includes the solar pastes business.
The company had previously reported second quarter 2012 sales of US$482 million, which included a US$90 million decline in sales from the previous quarter in its Electronic Materials segment, though did not breakout the segment's total sales.