Motech posts net loss as prices and demand fall

TROUBLED TIMES::The global solar power industry is facing lower subsidies, weak demand and falling prices, with Siemens giving up its loss-making business

By Lisa Wang  /  Staff reporter

Wed, Oct 24, 2012 - Page 14

Motech Industries Inc (茂迪), the nation’s biggest solar cell maker, posted a net loss of NT$787 million (US$26.83 million), or a net loss per share of NT$1.79, for the last quarter as chronic oversupply and the weak global economy drove down prices and demand.

The company’s results, released in a filing to the Taiwan Stock Exchange, were worse than the estimate of a net loss of NT$599 million, or a loss per share of NT$1.37, made by Fubon Securities Investment Services Co (富邦投顧) analyst Daniel Tzeng (曾健銓).

In the first nine months of the year, the Greater Tainan-based company’s net loss was NT$3.995 billion, including an impairment loss of NT$164 million from US wafer silicon subsidiary AE Polysilicon Corp. The figure was bigger than the loss of NT$517.68 million it posted for the same period last year, company data showed.

The global solar power industry is facing lower government subsidies, weak demand and falling prices. On Monday, German industrial conglomerate Siemens AG announced it is to give up its loss-making solar business, while Solyndra of the US won court approval for its bankruptcy plans.

Tzeng said the biggest problem facing the industry was oversupply.

“Most solar companies are still struggling in the morass of losses and we still have not seen major companies reducing their capacity yet, suggesting that the oversupply issue is likely to extend to 2013,” he wrote in a note yesterday.

Motech chief executive Chang Ping-heng (張秉衡) said early this month that order “visibility is very low” in this industry, adding that it had worsened to less than one month from two months since the industrial slump in the first half of last year.

“I do not think there will be a significant change in the fourth quarter. At least, I do not see any sign of a reversal [of current stagnation],” Chang said at the time, adding that the fourth quarter was a slow time for solar-panel installations because of cold weather.

Lately, customers have put orders on hold, awaiting the first ruling of the EU’s anti-dumping investigation into Chinese solar companies and amid an inventory-digestion period, Chang said.

Gloomy prospects reflected on the latest report by market researcher NPD Solarbuzz yesterday.

The report said solar photovoltaic (PV) equipment book-to-ratio fell into negative territory in the last quarter, which has never been seen since the industry began to take off in the mid-2000s.

NPD Solarbuzz said that was a result of order cancellations and push-outs worth US$3 billion.

“Negative book-to-bill metrics suggest that most legacy PV capacity expansion plans have now been canceled. This satisfies one of the first requirements for the PV industry to rebound from its overcapacity-driven downturn phase,” Solarbuzz analyst Ray Lian wrote in the report.

PV equipment spending is expected to decline by more than 66 percent this year, and is expected to remain at pre-2008 levels of US$5 billion next year, NPD Solarbuzz projected.

Equipment spending is not forecast to rebound until at least 2014, the report said.

Additional reporting by Kevin Chen