LDK Solar Co. Ltd. (ADR) (NYSE: LDK) reported on Monday that its fiscal third-quarter losses widened due to double-digit slump in sales while margins also worsened, impacted by a massive inventory write-down.
The solar industry, which is reeling under pressure due to underutilization of the manufacturing capacity in the backdrop of flagging demand for solar energy, has seen several solar firms filing for bankruptcy.
In a statement, LDK’s Chief Executive said on Monday, “ [third quarter results] continue to reflect the industry-wide pricing pressure and demand weakness that is negatively impacting the entire solar supply chain.”
Earlier the company pointed out that demand for solar energy would improve significantly by the second half of the year as it saw markets such as China recovering; nevertheless, it did highlighted near-term challenges facing the industry as a whole, at that moment.
The Company also downwardly revised its outlook on full-year revenue. LDK is now expecting revenue in the range of $950 million to $1 billion, compared to earlier projection of $1.1 billion to $1.5 billion.
For the current quarter, the Company is expecting revenue to come in the range of $230 million to $290 million, which is way short of analysts’ consensual estimate of $552.4 million.
For the third quarter, LDK reported a loss of $136.9 million or $1.08 per ADS, against a loss of $114.5 million or 87 ADS, in the year earlier quarter. Sharp decline in profit was mainly attributed to an inventory write-down of $37.8 million, which according to the company was necessitated by “ as a result of a continuous drop in the market price for polysilicon, wafers, cells and modules”.
Analysts’ polled by Thomson Reuters had forecasted loss of $1.24 ADS. In the just concluded quarter, the Company also received an income tax-benefit of $25.4 million, compared to a tax-benefit of $1.7 million, in the same period of last year.
Sales for the period contracted by 38% to $291.5 million, beating its own sales- forecast of $220 million to $260 million. Gross margins continued to deteriorate. For the quarter, gross margins stood at negative 11.2 percent, compared to negative 3.6 percent, in the corresponding period of last year.
LDK shares fell more than 9% in early trading today.
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