Solarfun continues bleeding red ink with $2.9m Q1 loss

solarfun 30011a Solarfun continues bleeding red ink with $2.9m Q1 loss

China’s Solarfun reported a quarterly loss of $2.9m against a backdrop of plummeting revenues and shipments, blaming industry-wide overproduction of solar modules, a lack of project funding, and unusually harsh winter weather in Germany.Solarfun, which makes silicon ingots, wafers and photovoltaic (PV) cells, saw its revenues drop 43% during the first quarter to $100.1m.

Shipments of PV modules totalled 35.7 megawatts (MW) – a 25% dip since the final quarter of last year. In the last three months, the average selling price per watt fell from $3.37 to $2.78 due to the hyper-competitive environment resulting from dozens of firms simultaneously attempting to gut their inventories.

The company nevertheless performed better than in the fourth quarter of 2008, when it saw a loss of $61.4m.

Solarfun president Peter Xie says that the company is not in a position to issue guidance for the year as there are still too many unknowns. Shipments and sales both continue to be pressured by swollen inventories, falling prices and the continued tight lending market for solar projects.

“However, we do believe that the first quarter will prove to be the low point for industry demand, and for our company, during this cycle,” Xie says.

Xie says the company is “cautiously optimistic” that it will see a meaningful rebound in demand for its products by the second half of 2009. But he adds that Solarfun remains locked into a number of supply contracts made before the rapid decline in commodity prices lowered prices across the supply chain.

“We are still aggressively negotiating with our suppliers regarding our existing multi-year contracts to bring raw material costs and pre-payment terms more in line with current market conditions,” Xie says. “This is a process, and is not always successful.”