SolarWorld slashes outlook on Chinese price war

Aug 13, 2012, 6:04 PM EDT

* No longer sees positive EBIT in 2012

* H1 sales 340 mln eur vs 534 mln year ago

* H1 EBIT loss 144 mln eur vs 70 mln profit year-ago

* Shares fall 12 percent

By Christoph Steitz

FRANKFURT, Aug 13 (Reuters) - Germany's SolarWorld slashed its outlook for the current year, accusing Chinese peersof unfairly undercutting the prices of its components whichpushed the company to a surprise first-half operating loss.

The solar industry is grappling with fierce competition,falling government subsidies for solar energy and oversupply - adeadly combination that has already claimed large players suchas U.S.-based Solyndra and Germany's Q-Cells.

Western solar companies have been at odds with their Chinesecounterparts for years, alleging they receive lavish creditlines from state-backed banks allowing them to sell at cheaperprices, while European players struggle to refinance.

Chinese companies have repeatedly dismissed such claims,warning any punitive action would harm the industry as a wholeand trigger a trade war between China and the European Union aswell as the United States.

SolarWorld said on Monday it would not be able to generatepositive earnings before interest and tax (EBIT) in 2012,because of "the aggressive market situation characterised byillegal trade practices".

The company, which makes components for solar panels thatconvert sunlight to electricity, reported a first-half operatingloss of 144 million euros ($177.3 million) compared with a 70million profit a year ago.

"These are some bad numbers and the huge loss came out ofthe blue. You can see that the sector's crisis leaves its markeverywhere," a trader said.

Calling the results "catastrophic", DZ Bank analyst SvenKuerten kept a "sell" rating on SolarWorld, whose shares wereabout 12 percent lower at 0815 GMT.

Last month a group of solar companies, led by SolarWorld,filed an anti-dumping complaint against Chinese rivals with theEuropean Commission. That followed a similar move in the UnitedStates which led to the world's largest economy imposing dutieson solar panel imports from China. ID:nL6E8IPBD9]


"Chinese manufacturers are breaking the rules and waging atrade war. Something has to be done to fight their illegaldumping practices," Chief Executive Frank Asbeck said in aletter to shareholders.

Following the U.S. government's decision in May, 59 Chinesesolar companies face an import duty of about 31 percent,including Yingli Green Energy, LDK Solar,Canadian Solar, Hanwha Solar One, JA SolarHolding and Jinko Solar.

"The question is whether all those anti-dumping complaintswill achieve anything. To me, it looks as if the industry isclinging to straws," the trader said.