Solarworld shocks shareholders with huge loss

Clouds are gathering over Germany's biggest solar panel-maker Solarworld, as the Dusseldorf-based company was forced to announce its "first-ever operative loss" since 2003 when the company was founded.

Earnings before interest and taxes (Ebit) plunged from a profit of 193 million euros ($258 million) in 2010 to a loss of 233 million euros last year, the company said.

Revenues declined by a staggering 19 percent to 1.06 billion euros in 2011.

Solarworld chief executive Frank Asbeck attributed the net loss to "a writedown on production facilities" to the tune of 313 million euros, and other "one-off events."

"Without them, we would have made a small profit of 24 million euros," he told Reuters news agency.

Cut-throat competition

In spite of a solar boom in Germany - seeing record 7.5 gigawatts of solar power go online in 2011 – the country's solar industry is struggling with overcapacity and suffering heavily from cheap panel imports from Asia.

The industry's woes are likely to be compounded by a 30 percent cut in solar subsidies, effective March 9, announced by the government on Thursday.

"We consider the cuts to be so deep that it's doubtful if Solarworld will become profitable again over the next two years," Erkan Aycicek, analysts with LBBW, told Reuters.

CEO Asbeck said that the company would seek to boost its foreign business in response to the subsidy cuts.

"After selling 68 percent of our products abroad last year, we strive to increase foreign sales to 75 percent," he said.

He also announced that the dividend would be cut from 19 cents per share to nine cents.

uh/gb (dpa, Reuters)