Motech Industries Inc (茂迪), the nation’s largest solar cell maker, yesterday posted its weakest quarterly earnings in six years after its gross margin hit a record low as prices fell amid oversupply in the sector and reduced demand as a result of a bleak economy.
During the first quarter, Motech’s net income plunged 82 percent to NT$48 million (US$1.42 million), the lowest level since the first quarter of 2003, after gross margin fell to 3.5 percent from 16.7 percent a year ago.
“We had a poor performance in the first quarter … The first quarter should be the bottom,” Motech financial executive Norman Shen (沈楨林) told an investor conference.
Gross margin could recover to 10 percent in the second quarter, primarily because of a price rebound and falling costs, Shen said.
Shen said Motech should make a profit this year, although bigger rivals have posted sizable losses because of oversupply and shrinking demand.
The world’s No. 3 solar cell maker, Suntech Power Holdings Co (尚德), based in Wuxi, China, on Feb. 18 posted losses of US$65.9 million for the final quarter of last year, blaming falling shipment and average selling prices, the company said on its Web site.
Suntech made US$111 million last year.
Motech set an ambitious goal of boosting shipment by almost 50 percent to 400 megawatts this year, from 270 megawatts last year, Shen said.
Shen said that the company was negotiating with its polysilicon suppliers for better terms as spot prices for key raw materials dropped amid waning demand after Germany’s second-largest solar energy company, Conergy AG, attempted to renegotiate a supply contract with US-based MEMC Electronic Materials.
Earlier this month, Motech reported that revenues for the first quarter dropped 15 percent to NT$4.17 billion from NT$4.9 billion a year ago, with 40 percent coming from Europe and 33 percent from the US.
Shen said the company was concerned about the government’s green energy policy and urged the government to push through the renewable energy law, saying the policy would help local firms win orders from Europe and the US.
Motech’s shares dropped 3.21 percent to NT$105.50 yesterday on the over-the-counter GRETAI Securities Market, underperforming the index, which rose 1.8 percent.