LDK Solar expects bounce-back in revenue in Q3 though wafer shipments remain weak

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Having recently made significant revisions to its second-quarter guidance, LDK Solar reported net sales of US$499.4 million, a decrease of 34.8% sequentially and a decrease of 11.6% year-over-year. Gross profit was US$11.0 million, compared to $241.6 million in the first quarter of fiscal 2011, with margins plummeting from 31.5% in the first quarter of fiscal 2011 to 2.2%. Net loss for the second quarter was US$87.7 million, compared to net income of US$135.4 million for the first quarter of fiscal 2011.

“Our second-quarter results reflect the challenging solar industry dynamics that resulted from recent policy revisions in Europe and consequently reduced demand for PV products,” noted Xiaofeng Peng, chairman and CEO of LDK Solar. “Lower pricing across the supply chain negatively impacted our financial results for the quarter.”

Shipments in the second quarter were in line with recently revised guidance. LDK shipped 429.2MW of wafers and 79.4MW of modules. Cell production reached approximately 123MW in the quarter and polysilicon production reached approximately 2,774MT.

LDK Solar noted that recovering market demand would lead to expected third-quarter revenue in the range of US$630 million-US$680 million and a gross margin in the range of 11-16%.

However, wafer shipments are not expected to increase. LDK guided wafer shipments between 350MW and 400MW, while in-house polysilicon production is expected to be flat with 2Q, in the range of 2,600MT to 2,700MT.

Revenue increase is being attributed to improved margins and increased module shipments. LDK expects shipments between 250MW and 300MW, while in-house cell production is end up between 200MW and 220MW.

LDK reiterated recently revised full-year guidance of revenue to be in the range of US$2.5 to US$2.7 billion, wafer shipments between 1.8GW and 2.0GW, and module shipments of 750MW to 800MW.

In-house polysilicon production for the full year is expected to be in the range of 10,000-11,000MT, while in-house cell production is guided to reach 600MW-700MW and gross margin between 15% and 20%.

“We are actively taking steps to improve our cost structure and strengthen our balance sheet. We continue to make progress on lowering our manufacturing costs as we gain scale in our newer PV product areas such as solar cells. Going forward, based on our current pipeline of business, we believe growth will resume in the second half of 2011,” added Peng. 

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