Sign of the times: LDK Solar lowers first-quarter outlook

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Although not the first PV manufacturer to lower financial forecasts, LDK Solar is the first of the major producers reacting to weaker-than-expected market demand by sharply revising downward its first-quarter 2011 financial forecast. However, LDK Solar expects the first-quarter market softness to be short lived, as the integrated PV producer reiterated guidance previously given for the full year. LDK Solar’s revised guidance but unchanged full-year expectations could be the recurring theme as the quarterly results period looms.

For the first quarter, LDK Solar expects to report revenue in the range of US$745 million to US$755 million, down approximately US$100 million compared to previous guidance of revenue between US$800 million and US$850 million. However, guidance of gross margin between 30.0% and 31.0% is higher than the previous guidance of between 27.0% and 29.0%.

LDK Solar also revised its production levels for the first quarter. The in-house polysilicon production was revised upwards to between 2,450MT and 2,470MT, compared to the previously guided range of 2,300MT and 2,400MT, which could explain the higher gross margin as polysilicon spot prices continue to provide excellent returns on tight supply conditions.

Wafer shipments were revised to between 625MW-635MW, compared to previous wafer shipment guidance of 610MW-660MW. Wafers have been in short supply, despite increased capacity at major producers such as LDK Solar.

Module shipments were guided to be in the range of 109MW-114MW in the first quarter, down from the previous guidance range of between 120MW-140MW.

The lower-than-expected wafer and module shipments supports views of several market research firms that module inventories in the supply chain are currently estimated to be in the range of 2-3GW.

In-house cell production, the smallest part of LDK’s production product portfolio, was only slightly revised to between 44MW and 46MW, compared to previous guidance of between 45MW and 50MW.

Overall 2011 guidance remained unchanged, highlighting that demand fundamentals for the year would remain on course for global PV installation growth, with future quarters generating higher demand than previously anticipated after a weaker-than-expected first-quarter demand scenario.

LDK Solar 2011 guidance called for revenue to be in the range of US$3.5billion-$3.7 billion, gross margins between 24% and 29%, and wafer shipments to be between 2.7GW and 2.9GW.

Previously guided module shipments were to be between 800MW and 900MW, polysilicon production to be between 10,000MT and 11,000MT, and in-house cell production to be between 500MW and 600MW. 

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