German solar firms hit by price war

Solar power equipment companies are still fighting a price war in a crowded industry, but results from German companies on Thursday showed the pain was less for those that are nearer to the end-users. Q-Cells, one of the world's largest maker of solar cells, said it would slash about a fifth of its workforce as it seeks to adapt to a price slump in the industry that caused a first-half loss before interest and tax of 47.6 million euros ($67.24 million).
But its share price was up 2.9 percent at 14.45 euros by 0930 GMT as traders said the news was not as bad as feared. Meanwhile Conergy, which makes wafers, cells and modules, posted a net loss of 31.1 million euros, but said it expects to return to profitability next year, when the industry is expecting tailwinds from big solar power subsidy programmes in China and the United States.
Asian rivals have put the heat on European solar cell and module producers, offering their products at much lower prices, and have already forced some players to move production abroad. But producers of silicon, wafers, cells and modules - at the start of the solar power industry's value chain - have been bitten much harder by the price fall than equipment makers and companies that are installing solar systems.
"End-customer contact is the decisive element in the sector, as demand there is relatively stable." said Arthur Hoffman, who manages the New Power Fund at Swiss Bank Sarasin & Cie. In fact, Germany's Phoenix Solar, a wholesaler that sells modules, and components, was able to post a small net profit and kept its 2009 outlook, planning to achieve sales of 520 million euros in 2009. It said end-customer demand, especially in Germany had remained strong, but noted that it was not able to fully escape the pricing pressure in the industry in the first half of the year.
Sounding a similar note, Aleo Solar, a module maker with close end-customer contact that made headlines earlier this month after it received a take-over offer from Bosch, said that deliveries had picked up in the course of 2009. On Wednesday Chinese firms JA Solar Holdings Co Ltd and LDK Solar Co Ltd both posted quarterly net losses due to the fall in prices.