LDK Solar sees revenues slightly fall from Q4, but remains confident on Q2 and full year guidance

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LDK Solar released its unaudited financial results for its first quarter, which ended March 31. While the company did see its gross margin increase both year-over-year and sequentially, revenue and sales were lower in comparison to its fourth quarter 2010 results. Q1 2011 revenue reached US$766.3 million, a 16.8% sequential drop from Q4 2010’s US$920.9 million. However, in a year-to-year comparison, sales grew 120.5% from US$347.6 million in Q1 2010.

Gross profit for Q1 totaled at US$241.6 million, down from Q4 2010’s US$251.4 million. However, Q1 2011 results showed a marked improvement over Q1 2010’s US$54.5 million. LDK Solar’s gross margin grew both sequentially and year-over-year being finalized at 31.5%, compared to Q4 2010’s 27.3% and Q1 2010’s 15.7%.

The company reported that its first quarter 2011 wafer shipments grew to 631.5MW, while module shipments reached 118.7MW. The company noted that it increased its wafer capacity in March to 3.5GW and is looking to reach a 4.2GW wafer capacity by the end of the year with minimal capital expenditure. The first quarter also saw LDK Solar reach its expected polysilicon production of 2,479MT, putting the company on the road to achieve its goal of 25,000MT by the end of the year.

Xiaofeng Peng, chairman and CEO of LDK Solar, advised that he felt encouraged by the activity level LDK Solar had seen going into Intersolar Europe 2011. He advised that Germany, Italy, the US, India and Japan are among the emerging markets that the company will continue to focus on throughout the year. The company is particularly interested in Europe and considers it one of the more important markets as the continent begins to change its focus from ground-mounted PV installations to rooftop projects.

Peng additionally disclosed that LDK Solar had seen its results for Q1 somewhat impacted by the Italian FiT issues and the Japanese earthquake earlier this year. However, with the recent news that Germany is planning to close its nuclear power plants, Peng holds a positive outlook for the company’s future in the country, Europe and beyond.

LDK Solar’s outlook for the second quarter sees the company hypothesizing that revenue will reach between US$710 million and US$760 million, with wafer shipments between 500MW and 550MW. Module shipments are anticipated to fall between 200MW and 220MW, while its in-house polysilicon production reaches between 2,650MT and 2,750MT. In-house cell production is expected to range from 120MW to 130MW, while gross margin will be between 22% and 26%. Jack Lai, CFO, executive VP and secretary of LDK Solar, advised that at this time, the company is not updating its 2011 full year guidance.

“During the first quarter, we made notable progress and executed on our growth strategy while improving our margin profile. This progress was made despite seasonality in the macro environment and regulatory uncertainties in Europe,” stated Peng. “The significant improvement in our margins demonstrates the success of our vertical integration strategy and strong market position.

“We experienced continued solid contributions from our wafer and polysilicon businesses and increased gross margins across all of our PV product segments. In addition, we increased our customer base and diversified our geographic mix, reflecting the quality and performance of our PV products.”

“We remain focused on managing our operations to drive profitability. Going forward, we expect to continue to use free cash flow to pay down debt, while also continuing to evaluate opportunities to convert short-term to long-term obligations. We are encouraged by the progress we made during the quarter in further differentiating LDK Solar in the global PV market,” concluded Peng.

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