North Coast Solar Stocks

March 25, 2009

Solarfun posts 4Q loss on inventory write downs

Filed under: SOLF — Tags: , , , , , — Jason @ 9:50 am

Solarfun Power reports 4th-quarter loss driven by $47.8 million in inventory write downs

The Associated Press
Wednesday March 25, 2009, 9:50 am EDT

Chinese solar cell maker Solarfun Power Holdings Co. (SOLF) on Wednesday reported a fourth-quarter loss, due mainly to $47.8 million in inventory write downs.

The company posted a loss of 418.8 million Renminbi ($61.4 million), or 1.56 Renminbi per American Depository Share (22 cents per ADS), compared with a profit of 66.4 million Renminbi, or 0.28 Renminbi per ADS in the same period last year.

Results include a $47.8 million charge, or a negative 74 cents per ADS, related to inventory write downs.

According to a poll by Thomson Reuters, analysts, who typically exclude one-time items, expected a loss of 0.59 Renminbi per ADS (8 cents per ADS), on average.

Revenue climbed 14 percent to 1.12 billion Renminbi ($164.6 million), from 987.8 million Renminbi during the prior-year period. Analysts forecast an average revenue of 1.10 billion Renminbi.

For the full year, Solarfun posted a loss of 280.5 million Renminbi ($41.1 million), or $1.11 per ADS (16 cents per ADS), compared with earnings of 148 million Renminbi, or 0.62 Renminbi per share. Revenue more than doubled to 4.95 billion Renminbi ($725.4 million), from 2.40 billion Renminbi in 2007.

The company’s chief executive, Harold Hoskens, said the company’s dismal report is a result of the global economic downturn.

“In the fourth quarter, funding for solar projects remained tight, excess inventories existed in many markets, and normal seasonal factors exacerbated softer demand,” he added.

Hoskens said that the industry is transitioning to a demand-driven environment from a supply-driven environment and module prices have declined along with a drop in the cost of polysilicon, which has been falling faster than module prices.

Hoskens said the company expects that in the first quarter demand will reach its low point, resulting in a decrease in shipments to around 35 megawatts. He added that gross margins should show some gradual improvements considering dipping supply costs.

For the year the company said it already signed contracts with customers totaling 200 megawatts and expects demand to improve, with momentum building in the second quarter. Due to market conditions, the company warned that average selling prices will likely fall by an additional 10 percent to 15 percent toward the end of the year. This will be offset by the rapidly declining price of polysilicon, which Solarfun said it plans to take advantage of.

The company added that it does not plan to expand capacity, which currently is able to support sales volumes of 280 megawatts, until future demand becomes more clear.

Shares of Solarfun fell 25 cents, or 6.4 percent, to $3.67 in Wednesday morning trading.


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