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Solar Sectors: One Falls, Another Gains

Written By Brianna Panzica

Posted August 12, 2011

Debt crisis fears in Europe shook up the markets and propelled changes in government funding for renewables.

These changes were felt in the solar industry when countries such as Germany, France, and Italy pulled back on solar subsidies.

German company Q-Cells (ETR: QCE), maker of photovoltaic cells, reported huge losses for the first half of 2011 and saw their stocks plummet.

Q-Cells reported an earnings loss of $504 million in the second quarter, despite the fact that sales doubled from the first quarter.

Stocks dropped 18% to the lowest point they’d been since the company went public in 2005.

What’s more, the company lowered its forecast for 2011, expecting to see sales fall 25% to $1.4 billion. The original outlook had forecast stability relative to 2010 rates.

Lars Dannenberg, an analyst at London’s Berenberg Bank, told Bloomberg, “If [Q-Cells] want[s] to survive, one of the options is an outside investor.”

Which is something that appears necessary. As Bloomberg reports, the company has a bond payment worth about $300 million due in February.

Q-Cells was once the world’s largest solar company. But with the recent losses, the company is falling behind.

Another German solar company, however, is on its way up.

SMA Solar Technology AG (ETR: S92), the leading maker of solar inverters, saw an 18.3% rise in stocks by close on Friday, up to $73.10.

Earnings for the company were posted at $147.5 million, surpassing estimates of $118.17 million by Bloomberg analysts.

SMA had a slow start this year – also hurt by the European subsidy cuts – but in the second quarter the industry saw improvements in the form of stabilizing costs.

SMA CEO Pierre-Pascal Urbon told Bloomberg that he expects a demand increase as the summer ends, and the company has an optimistic outlook for the rest of 2011.

Lars Dannenberg had a more positive view of this company as well, telling Bloomberg, “Germany will be kicking and the U.S. keeps performing. The stock is a safe harbor for clean-tech investors.”

While the photovoltaic cell industry has a large number of companies competing for market control, giving Q-Cells tough competition, the inverter industry is much more consolidated.

In fact, as Recharge reports, just four companies control over 60% of the industry: SMA, Power-One (NASDAQ: PWER), Kaco New Energy, and Fronius.

And even though Power-One is SMA’s biggest competitor, this year SMA sold 3.1 gigawatts of inverters while Power-One sold a mere 1.3 gigawatts.

And SMA has plans to expand its market, as demand in Europe remains shaky.

SMA will move into Japan, where the nation plans to incorporate 5 gigawatts of solar energy by 2013.

SMA alone controls 40% of the global solar inverter industry. This year about 56% of sales were abroad due to an expanding market in the U.S.

And the year is expected to just get better from here.

That’s all for now,


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