German solar firm Q-Cells reported heavy losses for 2011, hit by falling panel prices. Bad news also came from solar equipment maker Centrotherm which needs to shed a quarter of its workforce to survive.
Q-Cells reported the worst result in its history, posting a net loss of 846 million euros ($1.11 billion) in 2011 - down from a net profit of 18.9 million euros in 2010.
The company said Tuesday that revenue had fallen by a quarter to 1.02 billion euros, due to "shrinking margins" in panel production in the face of stiff competition from Asia.
Q-Cells, which is based in Bitterfeld in Eastern Germany, was the world's largest panel maker in 2005, but could only avoid insolvency last week after striking a last minute debt deal with its creditors.
Steep losses were also reported Tuesday by Centrotherm Photovoltaics, which saw earnings slump from a net profit of 75.4 million euros in 2010 to a net loss of 19.8 million euros last year.
In view of the dire figures, Centrotherm chief financial officer Thomas Riegler announced the company would lay off a quarter of its workforce.
"We will shed about 400 jobs to reduce to a maximum workforce of 1,500 employees," Riegler told the Reuters news agency.
In addition, the company wouldn't pay a dividend for 2011, he said, and would seek to "relocate" some of its production to Asia.
From boom to bust
After recent high-profile bankruptcies of Solon - Germany's first solar energy company to go public - and project developer Solar Millennium, most companies fear becoming the next victim of a dramatic industry shakeout driven by cheap panel imports from Asia and cuts in incentives for solar power generation in Germany.
Substantial state aid programs in China give companies there a financial edge over German manufacturers and have led to a drop in panel prices by a third in 2011.
"The fall in prices in recent months has exceeded our expectations," Frank Asbeck, head of Solarworld - another German solar firm - told the dpa news agency.
In addition, the German government has sharply reduced price guarantees for solar energy with the latest subsidy cut of 30 percent announced just two weeks ago.
The move came after the government had paid out record solar subsidies of 9 billion euros in 2011. However, it was strongly criticized by industry officials.
"The cuts mean an existential threat to the solar industry, and are strikingly out of balance with rising electricity costs," Günther Cramer, head of the solar industry group BSW, told Reuters news agency.
According to figures released by BSW recently, roughly 5,000 companies involved in the solar business have closed so far in Germany, shedding about 20,000 jobs.
uh/mll (dpa, Reuters)