Panel price drop hits JA Solar's profits

NEW YORK: Steep declines in solar equipment prices and an inventory write-down charge will push JA Solar Holdings Co Ltd to a quarterly loss, the company said on Monday, sending its share price down 8 percent.

The weak average selling prices and inventory provisions will cause its gross margins to fall to a "negative low single digit range," the company said in a statement.

JA Solar is the latest solar company to warn that lower prices for the equipment that turns sunlight into electricity hurt profits in the first half of the year.

Last week, First Solar reported lower-than-expected quarterly profit as prices for its thin-film panels fell 13 percent.

JA Solar, which will hold a conference call on Thursday to discuss its financial results, said its board approved a $100 million share repurchase program.

JA Solar and other solar companies have tried to increase their production of solar cells and modules, even though important markets in Europe have cut subsidies.

Second-quarter shipments would likely be about 400 megawatts, the Shanghai, China-based company said, in line with its forecast issued in May.

Gross profit margins would improve "significantly" in the second half of the year, and there are promising signs since July that orders and volume shipments have raised, said Chief Executive Peng Fang.

Germany, the United States and China look good in the second half, he said.

JA Solar's US shares fell 8.2 percent in premarket trading to $3.71. The shares were down nearly 42 percent this year through Friday's close.

Copyright Reuters, 2010