May 27, 2009 / 11:15 AM / 9 years ago

UPDATE 2-China Sunergy posts wider-than-expected Q1 loss

* Total sales fell 52 pct to $37 mln

* Reiterates full-year shipments outlook

* Sees lower average selling prices in Q2

* Shares fall as much as 8 percent (Recasts; adds details, conference call comments)

May 27 (Reuters) - Chinese solar cell products maker China Sunergy Co Ltd CSUN.O posted a wider-than-expected quarterly loss, hurt by a fall in average selling prices and high-cost inventory, sending its shares down as much as 8 percent.

In a conference call with analysts, Chief Executive Allen Wang said he expects second-quarter average selling prices (ASPs) to be 15 percent to 20 percent lower than the first quarter.

“Our existing inventory of high-cost wafers prevented us from taking full advantage of reduced upstream costs while our ASPs fell, leading to severe gross margin pressure and a net loss for the quarter,” Wang said in a statement.

However, Wang said in the call the company has consumed the entire high-cost inventory so far in the second quarter.

The company has begun to purchase lower-cost polysilicon wafers at spot market prices, which would bring down the inventory cost in the coming quarters, the CEO added.

Polysilicon is a key raw material for the company which makes photovoltaic solar products that turn sunlight into electricity.

China Sunergy, along with Solarfun Power Holdings Co Ltd SOLF.O, Canadian Solar Inc CSIQ.O and LDK Solar Co Ltd LDK.N got squeezed by a drop in inventory value in the fourth quarter, forcing these companies to take write-downs.

The company reported a negative gross margin of 23.7 percent for the first quarter.

However, Wang expects the company to generate positive gross margins in the second quarter.

The company also backed its full-year shipments outlook of 150 megawatts to 200 megawatts.

Shares of the company were flat at $3.87 in morning trade Wednesday on Nasdaq. They touched a low of $3.56 earlier in the session.

QUARTERLY RESULTS

For the first quarter, the company posted a loss of $15.9 million, or 40 cents per American Depository Share (ADS), compared with a profit of $545,000, or 1 cent per ADS, a year ago.

Excluding items, the company posted a loss of 33 cents per ADS. Total sales fell 52 percent to $37.0 million.

Analysts on average were expecting a loss of 26 cents a share, excluding items, on revenue of $37.5 million, according to Reuters Estimates.

Blended average selling price (ASP) fell about 50 percent to $1.64 per watt. Quarterly shipments were about 23.9 megawatt, compared with 24 megawatt, in the year-ago period. (Reporting by Sakthi Prasad in Bangalore; Editing by Ratul Ray Chaudhuri)

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