LDK Solar posts greater losses than revenue in 2Q: further drastic revisions to full-year guidance

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Losses continue to mount at LDK Solar as it reported a net loss for second quarter of 2012 that was higher than its revenue levels. Net sales were US$235.4 million compared to a net loss of US$254.3 million. Full-year guidance was again revised downwards to between US$1.1 billion to US$1.5 billion, down drastically from last quarter's revised guidance of between US$1.5 billion to US$2.0 billion. LDK Solar had started the year with a revenue guidance of between US$2 billion and US$2.7 billion.

The company said that the small increase in revenue in the second quarter was primarily due to increased wafer sales. LDK Solar reported net sales for the second quarter of US$235.4 million, compared to US$200.1 million for the first quarter of 2012, down significantly from US$499.4 million reported in the prior year period.

LDK Solar shipped 316.7MW of wafers, 135.6MW of cells and modules in the second quarter and produced a total of approximately 538MT of polysilicon. A total of approximately 90.8MW of cells was also produced during the second quarter.

The loss from operations increased from US$135.8 million for the first quarter of fiscal 2012 to US$172.7 million in the second quarter. However, the net loss for the second quarter was US$254.3 million, up from US$185.2 million in the first quarter, but continued to be lower than the net loss of US$588.7 million reported in the fourth quarter of 2011.

LDK Solar said it had agreed real estate property and land use rights sales with local government authorities in China, which generated liquidity. As a result, US$30.5 million of impairment loss for property, plant and equipment was recorded for the excess of book value to sales price.

Operating margin for the second quarter was negative 73.4% compared to negative 67.9% in the first quarter of the year. Gross margin for the second quarter was negative 39.1%, compared to negative 65.5% in the first quarter of fiscal 2012, and positive 2.20% in the second quarter of fiscal 2011.

The company reported an inventory write-down of US$35.1 million due to the cost of polysilicon and declining ASPs of polysilicon, wafers, cells and modules. 

“For the second quarter of 2012, our revenue was within the expected range as we saw wafer shipments increase sequentially,” stated Xiaofeng Peng, chairman and CEO of LDK Solar.  “Industry-wide competition and demand constraints continued to drive price declines across the entire solar supply chain and negatively impacted our margins and profitability.

Outlook

Management said that it expected revenue in the third quarter of 2012 to be in the range of US$220 million to US$260 million, wafer shipments between 190MW and 240MW, cells and module shipments between 140MW and 180MW

For the third quarter of fiscal 2012, LDK Solar estimates its revenue to be in the range of $220 million to $260 million, potentially flat to down with the second quarter. Wafer shipments were guided to be between 190MW and 240MW, down from the second quarter. Solar cells and module shipments are expected to be between 140MW and 180MW, flat to slightly up from the previous quarter.

However, the biggest revisions reside with full-year guidance. The company slashed its revenue forecast to be in the range of $1.1 billion to $1.5 billion. 

Having drastically cut polysilicon production in the previous quarter, LDK Solar expects polysilicon shipments to be between 1,100MT and 1,400MT. The company has a nameplate polysilicon capacity of 17,000MT.

For the full-year, wafer shipments are expected to in the range of 0.9GW and 1.2 GW, while cell and module shipments are expected to be between 550MW and 750MW.

After the acquisition of Sunways, LDK Solar said that it expected inverter shipments to be between 170MW and 210MW, down from previous guidance of between 200MW and 250MW.

The company expects PV system project construction to be in the range of 200MW and 300MW and to recognize between 110MW and 150MW through project sales and EPC services for 3rd party customers.

LDK Solar had said in the previous quarter that PV system project construction would be in the range of 400MW to 600MW and would recognize between 270MW and 360MW through project sales and EPC services for third party customers.

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