March 17, 2009 / 4:00 PM / 9 years ago

UPDATE 1-Day4 loss balloons, sees challenges ahead

*Fourth-quarter loss C$29 mln, 79 Canadian cents a share

*Price pressure to hit sales, profit in first half of 2009

*Stock tumbles 24 percent (Adds detail)

OTTAWA, March 17 (Reuters) - Day4 Energy Inc DFE.TO said on Tuesday that its fourth-quarter loss ballooned to C$29 million ($22.8 million) as it took big asset and inventory writedowns, and the solar energy company sees tough times ahead this year.

A squeeze on selling prices is expected to hit revenue and gross margin in the first half of 2009 and could trigger further inventory writedowns in the first quarter, the Canadian maker of photovoltaic cells and modules said.

The company also said that global economic instability and bad weather in its key market of Germany are expected to hurt results in the “early part” of 2009.

Shares in Day4 - part of a sector hard hit by oversupply, a sharp drop in prices, and reduced funding for solar projects - fell 23 percent on the Toronto Stock Exchange to 35 Canadian cents on Tuesday.

The company, which has reduced production at its Burnaby, British Columbia, plant to “minimal levels”, said demand is expected to pick up through the second quarter as its contract manufacturer Jabil Circuit (JBL.N) ramps up operations.

In the period ended Dec. 31, Day4 said it lost C$29 million, or 79 Canadian cents a share, compared with a quarterly loss of 29 Canadian cents last year.

The most recent results include an C$8.7 million asset impairment charge, C$5.2 million inventory writedown and C$6.3 million provision for doubtful accounts.

Revenue rose 141 percent to C$16.6 million from C$6.9 million in the same period last year, but fell 48 percent from the third quarter.

Cash at quarter end was C$25.8 million, down from C$43.6 million at Sept. 30.

“Our objectives in managing through the current shakeout in the sector are to continue to evolve the business strategically and conserve cash,” said Chief Executive George Rubin in a statement.

“The low capital cost models with technological differentiation and a strong downstream position are going to be critical to success during these difficult times.”

China-based Canadian Solar Inc (CSIQ.O) reported a bigger than expected quarterly loss of $50.6 million on Tuesday. Its stock dropped nearly 14 percent to $3.35 on Nasdaq. ($1=$1.27 Canadian) (Reporting by Susan Taylor; Editing by Frank McGurty)

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