March 18, 2009 / 4:23 PM / in 9 years

Timminco shares plunge on production cuts, results

OTTAWA, March 18 (Reuters) - Timminco Ltd TIM.TO shares plunged to a two-year low on Wednesday as analysts slashed their stock-price targets in response to output cuts at the silicon producer.

Timminco, which reported worse than expected financial results after markets on Tuesday, said it would suspend production of silicon metal because of lower demand from chemical and aluminum companies.

The pullback in production, which starts in April, will also result in temporary job cuts, the company said. Timminco did not specify how long silicon metal production would be suspended as it works though existing inventory.

Production of solar grade silicon will also be reduced to match a decline in orders, and expansion plans are on hold until the sector recovers, the company said.

Timminco stock fell as much as 32 percent to bottom at C$1.60 on the Toronto Stock Exchange on Wednesday before regaining some ground to C$2.11.

Dundee Securities analyst Ian Tharp downgraded the stock to “sell” from “neutral” and cut his 12-month stock target to C$1.60 from C$2.80.

Raymond James analyst Andy Nasr kept a “market perform” rating but chopped his six- to 12-month stock target to C$2.50 from C$10. Clarus Securities maintained a “buy” rating but cut its target to C$5.50 from C$14.

“We would recommend investors capitalize on the pullback in the solar sector and switch into more mature incumbent names in the solar industry,” Nasr said in a report.

Timminco reported a fourth-quarter net loss of C$1.3 million, or 1 Canadian cent a share, compared with a loss of C$8.8 million, or 8 Canadian cents a share, in the same period a year earlier.

Revenue doubled to C$72.7 million.

The results lagged analyst expectations for a profit of 6 Canadian cents a share and sales of C$76 million, according to Reuters Estimates.

The solar energy sector has been hurt by the global economic downturn, oversupply, a sharp drop in prices and diminished funding for solar projects.

Timminco customer Canadian Solar Inc CSIQ.O, for example, posted a bigger-than-expected quarterly loss on Tuesday and its stock fell nearly 14 percent.

$1=$1.27 Canadian Reporting by Susan Taylor; Editing by Peter Galloway

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