PV module encapsulant material supplier, STR Holdings warned late last week that sales would not meet previously guided levels. The company had previously guided sales to be in the range of US$44-US$48 million. However STR has revised guidance to approximately US$36.5 million, well below that level.
“Although the solar industry appears to have temporarily benefitted from strong German installations in December, we believe that most of this demand was satisfied from existing module inventory,” said Barry A. Morris, executive vice president and chief financial officer. “We are positioning ourselves to benefit from the anticipated recovery in demand later in 2012 by focusing our efforts on cost control and improving our working capital. During the quarter, we improved upon our already strong liquidity, finishing 2011 with approximately US$59 million in cash.”
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The CFO’s comments were almost identical to those from STR’s third quarter financial results statement that explained an expected draw-down on inventories to meet Q4 demand, impacting sales. In effect, STR management did not provide a reason for the lower than expected revised revenue guidance.
According to equity analyst, Mark Bachman at Avian Securities, STR’s revised guidance was clear evidence of his long-held view that the company was losing market share and impacted by lower priced Asia-produced products. Therefore margins are being squeezed “as STRI attempts to retain its current customer list,” commented Bachman in a research note.