North Coast Solar Stocks

August 13, 2009

Q-Cells to cut about 500 jobs in restructuring

Filed under: FSLR, JASO, KYO, LDK — Tags: , , , , , — Jason @ 3:49 am

Thu Aug 13, 2009 3:49am EDT

* Q-Cells says to review all investment projects

* Aims to reduce production costs by 25 pct

* Books further write-down for REC, H1 loss 697 mln euros

* Phoenix Solar EBIT lags expectations, confirms ’09 outlook

* Q-Cells indicated down 6.6 pct, Phoenix Solar up 0.4 pct

By Christoph Steitz

FRANKFURT, Aug 13 (Reuters) – Q-Cells, one of the world’s biggest makers of solar cells, is planning to slash about a fifth of its workforce, it said on Thursday, in a move to counter the effects of a price war.

“Together with the necessary reduction in overheads in all areas, around 500 jobs will be cut permanently. Short-time work will continue to be in operation at the Thalheim plant depending on the market development,” Q-Cells said in a statement, adding it would review all investment projects.

It now employs about 2,600 staff.

The news comes a day after Chinese rivals JA Solar Holdings Co Ltd (JASO) and LDK Solar Co Ltd (LDK) posted quarterly net losses due to a price slump that has put a sudden stop to growth in the sector.

Q-Cells in July withdrew its 2009 sales forecast after the price slump and high operating costs brought a 62 million-euro ($87.58 million) second-quarter operating loss. At the same time it announced outline details of the restructuring program.

It expects the restructuring to cut production costs by 25 percent, necessary after Asian rivals cut prices.

In the first half of 2009 the company made a net loss of 696.9 million euros, caused by further writedowns on the sale of its stake in Norway’s Renewable Energy Corp in May. The writedowns were widely expected by analysts.

TROUBLE

“Nothing really extraordinary from Q-Cells’ final report. But restructuring measures don’t sound like the big coup. (The) report again showed that the company is in a lot of trouble,” a Frankfurt trader said.

Q-Cells compatriot Phoenix Solar also said on Thursday that first-half results were hit by price pressures but stuck with its 2009 forecast for sales of 520 million euros.

Shares in Q-Cells were indicated 6.6 percent lower at 0608 GMT, while Phoenix Solar shares were seen 0.4 percent higher.

The solar power equipment industry has fallen victim to free-falling prices caused by oversupply and many of the industry bellwethers in the United States have posted weak earnings.

However, First Solar (FSLR), which rivals Q-Cells as the world’s biggest maker of solar cells, has so far proved to be coping much better with the crisis.

The price war, mainly triggered by Asian competitors, has already forced some European players, such as German’s Ersol and Norway’s Renewable Energy Corp, to either consider or to already move production abroad.

Q-Cells’ other major rivals, Japan’s Sharp Corp and Kyocera (KYO), have remained relatively unscathed by the crisis, as their cell business only accounts for a small part of their businesses. ($1=.7079 euros)

(Editing by Greg Mahlich)

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