Friday, September 03, 2010

LDK Solar Swimming Against Downstream Profit Currents

LDK Solar (LDK-$7.87) said module shipments more than doubled in second-quarter 2010 to 74 megawatts. However, chief financial officer Jack Lai has yet to deliver on his promise that moving downstream into module production would position the company to improve profitability across the solar supply chain.

Although average selling prices for modules increased 3 cents sequentially to $1.77 per watt, selling margins fell 70 basis points quarter-to-quarter to 7.6 percent, mostly due to increases in non-production costs.

With other Chinese-based competitors aggressively ramping up production capacity, control over pricing will likely become more demand-dependent -- and short-lived. Ergo, successfully executing on the profitability objective could prove even more elusive.

Continue Reading ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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