China's PV companies feel the squeeze

No-one has been blinded by the fizzling performance of China's solar companies. One after another they have announced falling revenues as they scramble to balance output capacity with demand and slash their costs.

Trina Solar, Jinko Solar, LDK Solar, Yingli Solar and Hanwha SolarOne have all cut shipment forecasts for the year with everyone pointing to the falling demand in Europe as feed-in-tariffs have been reduced, although a massive ramping up of production in China has contributed to the problems.

Few were surprised when LDK Solar issued a fourth-quarter revenue outlook that fell short of even the pessimistic analysts' forecasts. Its revenues dropped 30 percent from the same quarter last year ago to USD471.9 million. It also reported a third-quarter inventory write-down of USD47.3 million and said it was concentrating on cost reduction and balance sheet strengthening, resulting in an end to capacity expansion in the near-term.

JinkoSolar reported that its third-quarter net income fell 74 percent from a year earlier. Like LDK it cut inventory by cutting its full-year module-shipment estimate by as much as 23 percent.

For even those companies that have had full order books, their unit costs have fallen dramatically cutting profit margins and increasing loan pressure. According to Bloomberg New Energy Finance data, solar-cell prices have fallen more than 60 percent this year.

As such Trina also moved from profit to loss in the third quarter with its CEO saying the cause was mainly “significant price declines and tightened financing conditions, which affected some of our customers’ large European projects,” said Trina's chief executive officer, Jifan Gao in a statement.

At Yingli another third quarter net loss of USD22.4 million was recorded down from a second quarter profit of USD59 million.