Q-Cells Leads Solar Stocks Lower on Reduced Forecast

By Nicholas Comfort

Dec. 9 (Bloomberg) -- Q-Cells SE, Germany’s largest solar company, led solar stocks lower in Frankfurt trading after cutting its 2008 and 2009 earnings outlook as customers delayed orders on slowing economic growth and tighter financing.

Q-Cells fell as much as 9.29 euros, or 34 percent, to 18.01 euros, the biggest drop since it sold shares in 2005, and was at 20.66 euros as of 3:34 p.m. local time, valuing the company at 2.33 billion euros ($2.98 billion). Solarworld AG fell 7.1 percent and SMA Solar Technology AG slumped 16 percent.

Q-Cells slashed its profit and revenue forecast for this year as customers told the solar cell maker over the last week that they need to delay deliveries until 2009 because of a lack of funds, Chief Executive Officer Charles Anton Milner said.

Solar power plant operators and panel makers are trimming demand for the solar cells as banks have become more reluctant to fund projects, said Dieter Furniere, an analyst at Dexia Securities. Q-Cells, which raised its forecasts last month, said today it will cut output and expects the weaker demand to continue into next year.

“This will be seen very negatively, as Q-Cells is seen as the most resilient” among its competitors, said Furniere, who rates the stock “neutral”. “Everybody is lacking money.”

Halting Plants

The company will halt its plants through Christmas and New Year until the second week of January, Milner said on a conference call. The shutdowns will be used to perform maintenance and work off employee overtime, he said.

Output will grow by less than the company had previously forecast in 2009 and revenue will miss anticipated growth rates, the company said earlier today in a statement.

Q-Cells will cut costs by laying off temporary workers, Chief Financial Officer Hartmut Schuening said on the call. The company is “very flexible” because about 20 percent of its employees are on temporary contracts. The company will also stop hiring over the “next few months,” according to the CEO.

Other cost cutting measures include a slower timetable for the start-up of a Malaysian plant in the second half of next year, Schuening said. This program should keep profit margins “healthy,” Milner said, without specifying how profitable the company will be next year.

With the exception of delays, the company is sticking to its 500 million-euro spending plan for 2009, according to Milner. The company also makes thinfilm for solar products.

Falling Prices

The cut in this year’s forecast is also because of falling prices in the fourth quarter, Milner said. Prices will also decline in the first half and recover once access to funding begins to stoke demand, he said. That may happen at the end of the second quarter, propelling prices up by more than 8 percent in 2009, he said.

The company’s competitors are “weak and weakening” and a consolidation should benefit the industry, Milner said. While he didn’t rule out making acquisitions to expand capacity, purchases aren’t a priority, he said.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net