LDK Solar Cuts 3Q, Full-Year View On Declining Prices

LDK Solar Co. Ltd. (LDK) cut its third-quarter and full-year guidance as the rapid decline in prices for wafers and modules rapidly is expected to weigh on financial results.

American depositary shares fell 1.2% to $3.49 in recent after-hours trading as the Chinese maker of multicrystalline solar wafers and solar panels also said it expects to write down $45 million to $50 million of inventories in the latest period.

The company now sees third-quarter revenue between $460 million to $470 million, down from its August forecast of $630 million to $680 million. Wafer shipments are now expected to be between 285 megawatts and 290 megawatts, down from its prior view of 350 megawatts to 400 megawatts. Module shipments are expected to be between 185 megawatts and 190 megawatts, down from the prior view of 250 megawatts to 300 megawatts.

Due to the declining market price for wafers in the latest period, gross margin is also expected to be between negative 3.5% and 5%. In August, the company forecast gross margin between 11% and 16%.

For the full year, LDK now sees revenue between $2.2 billion to $2.25 billion and gross margins between 9% and 12%. The company previously forecast $2.5 billion to $2.7 billion and 15% to 20%, respectively. LDK also cut its expectations for wafer and module shipments.

Shares of solar-product makers have hit multi-year and all-time lows in recent weeks as the industry continues to struggle with weak demand in Europe-the world´s largest solar market-an oversupply of solar panels from Asia and falling prices. Many solar panel manufacturers are looking to expand into growing markets, such as the U.S. and India, and new markets, such as Africa and the Middle East, as subsidy cuts and financing difficulties have hit demand in Italy, Germany and other European countries.

LDK had seen revenue soar in recent quarters as global solar demand grew. But the company swung to a second-quarter loss in August as lower demand from Europe caused prices to drop, hurting revenue and margins.