Iris Hellas

Delayed fourth quarter and full-year results at LDK Solar show the full extent of the challenges facing the integrated PV manufacturer. Having already revised downwards its fourth quarter figures, the company missed revenue guidance and guided first quarter revenue to levels not seen since the second quarter of 2009. Loss from operations for the fourth quarter of fiscal 2011 was US$531.4 million on the back of heavy write downs across the company, leading to a net loss of US$588.7 million. Revenue reached US$2.15 billion in 2011, compared to US$2.5 billion in 2010.

"The solar industry experienced a tremendous supply and demand imbalance throughout the value chain during the fourth quarter. Our results reflected the negative effects of this dislocation in the PV market," stated Xiaofeng Peng, chairman and CEO of LDK Solar.

"Weak market demand and rapidly declining average selling prices reduced our revenue and adversely impacted our margins in the quarter.”

LDK Solar reported net sales in the fourth quarter of US$420.2 million, compared to US$471.9 million for the third quarter of fiscal 2011 and US$920.9 million for the fourth quarter of fiscal 2010. In previously revised guidance the company had expected sales to be in the range of US$440 to US$450 million.

However, rapidly declining ASPs were not the complete picture as LDK Solar reported wafer shipments of 197.1MW, below revised guidance of shipments of 215MW-220MW, up slightly from the low-point of previous initial guidance of 200MW-270MW.

Solar cell and module shipments were expected to be between 250MW and 260MW, higher that previous original guidance of 180MW-270MW. Actual fourth quarter cell and module shipments reached 255.5MW, near the low point of revised guidance.

The company said that it had produced 2,317.8MT of polysilicon during the fourth quarter, compared to revised guidance of between 2,100MT and 2,300MT, slightly exceeding targets.

The expected inventory write down as ASPs declined, included polysilicon, wafers and modules to the tune of US$232.6 million. LDK Solar said that this also included provisions for previous firm purchase commitments.

A provision was also made for doubtful receivables and prepayments of US$179.2 million due to what management described as a deterioration in the solar market, impacting customers and suppliers.

Operating margin for the fourth quarter was negative a massive 126.5%, compared to negative 16.3% in the third quarter of fiscal 2011 and positive 22.1% in the fourth quarter of fiscal 2010.

Financial guidance for Q1
"In 2012, we expect that excess capacity and further policy uncertainties in Europe and the US will result in continued intense competition within the solar industry. As such, we remain focused on improving our cost structure by driving down production costs and closely managing our operating expenses. PV applications are increasing globally with improved affordability for solar electricity. We continue to believe that the considerable opportunities to meet global energy needs with solar power will drive long-term market growth," added Peng.

However, sales are set to fall further and at a faster rate in the first quarter of fiscal 2012. The company guided that revenue would be in the range of US$190 million to US$230 million, potentially less than half fourth quarter levels and in the range of sales last posted (US$228.3 million) for the second quarter of fiscal 2009.

LDK Solar guided first quarter wafer shipments between 140MW and 150MW, cells and module shipments between 170MW and 180MW, underlining fallen demand for its products.

However, in-house polysilicon production is expected to be between 1,800MT and 1,900MT, up from revised fourth quarter levels. In-house cell production is expected to be between 40MW and 50MW.

Financial guidance for 2012
LDK Solar did provide full-2012 financial guidance, despite market conditions. The company expects revenue to be within a wide range of US$2.0 billion to US$2.7 billion, compared to revenue of US$2.15 billion in 2011.

On the production front, polysilicon is expected to exit the year at a production level between 12,000MT and 15,000 MT, of which shipments to third party customers are expected to be between 6,000MT and 8,000MT, around half of expected production.
Wafer production is expected to be between 2.7GW and 3.3GW, of which shipments to third party customers are expected to be between 1.5GW and 2.0GW.

LDK Solar said that it expected in-house cell production to be between 1.2GW and 1.6GW, and module production to be between 1.2GW and 1.6GW, with cell and module shipments to third party customers between 1.0GW and 1.3GW.

Having acquired a majority share in Sunways, LDK Solar provided inverter shipment guidance for the first time; highlighting shipments are expected to be between 200MW to 250MW in 2012.

In the downstream PV project business, LDK Solar expects project construction to be in the range of 400MW to 600MW and to recognize between 270MW and 360MW through project sales and EPC services for third party customers in 2012.