WRAPUP 5-Solar results reflect strong demand, uncertainty

* JA Solar raises outlook, shares slump 6.89 percent

* Q-Cells, Centrotherm, Phoenix Solar beat expectations

* Q-Cells CEO sees demand, prices dropping in 2011

* Investors await SunPower later on Tuesday
(Adds details on JA Solar, SunPower, first-quarter demand)

By Christoph Steitz and Dana Ford

FRANKFURT/LOS ANGELES, May 11 (BestGrowthStock) – German solar
companies and a Chinese rival benefited from brisk demand for
renewable energy in the first quarter, but looming cuts in
Germany’s industry subsidies hurt their shares.

German photovoltaic module maker Q-Cells (QCEG.DE: ) and
wholesaler Phoenix Solar AG (PS4G.DE: ) topped analyst forecasts
for the first quarter, as did fast-growing China-based JA Solar
(JASO.O: ), which posted record quarterly sales.

But German solar companies warned that demand and solar
panel prices could fall after Germany cuts their subsidies this
year.

Nedim Cen, chief executive of Q-Cells, the world’s No. 4
solar cell maker, said he is optimistic about business in the
second half of 2010, but worries that prices could fall in
2011. [ID:nLDE6491RL]

European players are already struggling to digest the slump
that pushed prices for modules and cells down by up to 50
percent while low-cost Asian players snatch market share.

“We all know that demand is strong and quite frankly, I was
expecting the German players to exceed expectations,” said Jon
Sigurdsen, renewable fund manager at DnB Nor’s Carlson,
pointing to strong quarterly results from Q-Cells, Phoenix
Solar and solar machine maker Centrotherm (CTNG.DE: ) on
Tuesday.

Shanghai-based JA Solar posted a quarterly profit and
raised its outlook on strong demand for photovoltaic solar
equipment that helps turn sunlight into electricity.
[ID:nN07217292]

But some analysts had expected even stronger results from
the company, which had raised its quarterly sales forecast, and
its shares fell more than 6 percent.

JA Solar expects to begin ramping up its production
capacity later this year to reach 1.5 gigawatts and said its
average selling prices dipped in January and February, but
began to rebound in March and are likely to rise slightly in
the second quarter.

MATURING SECTOR

Once spoiling investors with lavish returns, the solar
sector is in the process of consolidation as governments cap
support for the subsidy-dependent industry to move it closer to
being economically independent.

Plans by the German government to cut so-called feed-in
tariffs, which emerged in January, have caused solar stocks to
tumble. The tariffs are the sector’s support until there is
grid parity — the point at which solar power costs the same as
fossil-fuel generated power. [ID:nLDE60D273] [ID:nLDE60E0E4]

As customers pile in to take advantage of the subsidies
before they get slashed, sales are surging, but analysts fear
booming demand could lead to oversupply and falling prices in
the second half of the year.

Andreas Haenel, chief executive of solar wholesaler Phoenix
Solar (PS4G.DE: ) said he expected a drop in demand for solar
products in the third quarter, once the cuts become effective.
[ID:nFAB015619]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Graphic on China’s cell market share vs Germany:

http://graphics.thomsonreuters.com/10/EZ_SLRMS0510.gif

Graphic on price developments vs new capacity:

http://graphics.thomsonreuters.com/10/EZ_SSLRPC0510.gif

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Unlike some of their U.S. and Chinese peers, Q-Cells,
Centrotherm, Phoenix Solar and SolarWorld (SWVG.DE: ), Germany’s
largest solar company by sales, kept their 2010 outlooks but
did not raise them.

“None of the companies changed their 2010 guidance, despite
better-than-expected worldwide demand trends in the first half
of 2010, mostly due to ongoing uncertainties around the impact
of second-half German feed-in tariff cuts,” Bryan, Garnier & Co
analyst Ben Lynch wrote in a note.

Shares in JA Solar fell 6.89 percent on the Nasdaq, while
SolarWorld fell 7.3 percent, and Centrotherm’s stock fell 3.9
percent. Q-Cells shares were 5.3 percent lower while Phoenix
Solar shares gained a 1.1 percent.

Fears about the loss of subsidies also hit Spain where last
week Renovalia postponed its IPO. [ID:nLDE6461IG]

For a FACTBOX on Germany’s solar elite, double click on
[ID:nLDE64A1EU]

For an ANALYSIS on German solar sector subsidy cuts double
click on [ID:nLDE60E0E4]

For an ANALYSIS on China’s solar industry double click
[ID:nTOE5BK09Q]

Stock Market

(Additional reporting by Martin Roberts in Madrid and Matt
Daily in New York)
(Reporting by Christoph Steitz in Frankfurt and Dana Ford in
Los Angeles. Editing by David Cowell and Robert MacMillan)

WRAPUP 5-Solar results reflect strong demand, uncertainty