* 2nd-qtr results expected to be much better than 1st qtr
* Market focused on outlook for demand, pricing in H2
* Financing, US stimulus helping demand
* But panel prices still falling
By Nichola Groom and Christoph Steitz
LOS ANGELES/FRANKFURT, July 22 (Reuters) - Investors are
looking for signs of a recovery in solar panel demand when
manufacturers report earnings in the coming weeks, though panel
prices are still falling fast and earnings may not see a
meaningful improvement until 2010.
U.S. solar players including SunPower Corp (SPWRA.O), First
Solar Inc (FSLR.O) and MEMC Electronic Materials (WFR.N) are
scheduled to report quarterly earnings this week and next, with
Chinese and German companies' results also in the offing.
Recently, companies including SunPower and Yingli Green
Energy Holding Co Ltd (YGE.N) have said the solar market turned
a corner in the second quarter. Last week, however, the world's
top solar cell maker, Germany's Q-Cells (QCEG.DE), injected
fresh nervousness into the market when it withdrew its 2009
outlook -- which it had previously cut three times.
Demand for solar panels has suffered this year due to a
lack of available financing for renewable energy projects and a
pullback in government subsidies in Spain and Germany. That
demand slide has lead to a global glut of solar panels that has
sent prices tumbling and hampered manufacturers' profits.
Second-quarter results from solar companies are expected to
be significantly better than the previous quarter, when many
reported hefty losses. Analysts are more interested, however,
in the manufacturers' outlooks for the remainder of the year.
"What will be most important will be management commentary
on demand and average selling prices," Simmons & Co analyst
Burt Chao said in an interview. "I would expect Q3 demand to
improve, and if they talk that down that would be very negative
for the stocks."
Many companies have said they expect improved financing
conditions and funds from the U.S. economic stimulus to boost
demand in the second half of this year, yet financing remains
tight and government programs have been slow to roll out.
In addition, prices on solar panels are still falling.
"Many solar companies set expectations for improving demand
in the second half of this year," said Gabelli & Co analyst
Hendi Susanto. "We believe higher-than-expected price declines
will likely overshadow improving volumes."
Earlier this week, Bank of America/Merrill Lynch analyst
Steven Milunovich downgraded the solar sector to "underweight,"
citing the risk that demand will not recover as much as
expected. He added that this year's rally in alternative energy
stocks may be over for the time being as second-quarter results
"should be disappointing."
SUNPOWER KICKS IT OFF
Panel maker SunPower will kick off the solar earnings
season after the market closes on Thursday. For SunPower, the
market is focused on to what extent the company is feeling
pressure from lower-priced Chinese competitors, which could
result in steeper-than-expected price declines. Barclays
Capital analyst Vishal Shah said in a client note that he
expects SunPower to cut its 2009 revenue outlook.
SunPower should also offer insight into the global
financing environment and outlook for U.S. solar policies.
In the first half of August, investors will also hone in on
a raft of earnings from solar companies out of Germany -- the
world's biggest solar market -- including industry bellwethers
such as Conergy (CGYG.DE) AG, SolarWorld (SWVG.DE) and Solon SE
(SOOG.DE).
Top German solar company Q-Cells stunned the industry when
it forecast a second-quarter loss before interest and tax of 62
million euros ($87.99 million), as the recovery it had hoped
for failed to materialize. [ID:nLE396437]
German cell maker Ersol (ES6G.DE), owned by the world's
largest supplier to the automotive industry Bosch [ROBG.UL],
hit a similar note by substantially cutting its full-year
profit outlook.
"To me, this (recovery) has been wishful thinking," said
Sebastian Growe, analyst at Equinet. "There is a hope among
companies, but what strikes me is that this has seldom
translated into hard estimates, real numbers."
Hopes rest on all-rounders such as SolarWorld, which has so
far remained relatively unscathed by the crisis that has hit
the sector.
German manufacturers' woes may not extend to Chinese
counterparts including Suntech Power Holdings Co Ltd (STP.N),
Yingli Green Energy Holding Co Ltd (YGE.N) and JA Solar
Holdings Co Ltd (JASO.O), analysts said, as price declines on
Chinese-made panels were more dramatic earlier this year, when
many took hefty inventory writedowns.
"With Q-Cells, one of the real key things they said was
(prices) have declined a lot faster than we had previously
expected," Chao said. "The Chinese manufacturers have taken the
(price) declines early on."
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