UPDATE 1-INTERVIEW-China's LDK Solar sees 2008 profit up a third
Thu Jan 17, 2008 2:47pm GMT
* China's LDK Solar (LDK.N: Quote, Profile, Research) expects net profit to top $200 mln in 2008 vs own forecast of over $150 mln in 2007 * LDK Solar could become No. 1 wafer maker by shipment in three years' time * LDK Solar to boost headcount to 10,000 by end-2008 from 6,500 now (Adds details)
By Judy Hua
SHENZHEN, China, Jan 17 (Reuters) - Solar wafer maker LDK Solar Co Ltd (LDK.N: Quote, Profile, Research) expects its net profit to exceed $200 million this year, about a third higher than the company's forecast for net profit of more than $150 million in 2007, its chief financial officer said on Thursday.
The company, based in China's central province of Jiangxi, aims to quadruple its wafer production capacity to 1,600 megawatts by 2009 from 400 megawatts now to meet robust demand.
LDK is likely to overtake Norway's Renewable Energy Corporation ASA (REC.OL: Quote, Profile, Research) to become the world's largest wafer maker in terms of shipment in three years' time, Jack Lai, chief financial officer told Reuters on the sidelines of a solar technology conference in the southern city of Shenzhen, near Hong Kong.
"Our target is to become the largest and the most cost-effective solar wafer maker in the world," Lai said.
"We are growing faster than REC, although REC is growing very aggressively. There is a chance that we could exceed it in three years' time."
LDK has forecast wafer shipments of 510 megawatts to 530 megawatts in 2008, and 1,050 megawatts to 1,150 megawatts in 2009.
The company, which manufactures and sells solar wafers to be used to build panels and arrays, has been diversifying its customer base by signing a string of contracts with solar cell companies in Europe and the United States, including German's Q-Cells AG (QCEG.DE: Quote, Profile, Research).
Sales from Chinese clients, such as Suntech Power (STP.N: Quote, Profile, Research) and Solarfun Power Holdings (SOLF.O: Quote, Profile, Research), accounted for 30 percent of the company's total turnover in 2007 from 70 percent a year earlier.
Thanks to such contracts, LDK has essentially sold out all of its shipments in 2008 and 90 percent of shipment next year, Lai added.
"We aim to sell to the top 20 solar cell makers in the world."
The company's gross margin has been declining due to a tight supply environment for polysilicon, a key raw material which accounted for 80 percent of LDK's costs.
Polysilicon prices have shot up recently as solar cell and semiconductor companies scramble to secure supplies of it.
To better secure the raw material, LDK plans to spend $1.2 billion to build two polysilicon plants in Jiangxi, with a total capacity of 16,000 tonnes by 2009, Lai said.
Their combined polysilicon output is expected to be 5,000 to 7,000 tonnes in 2009.
Some analysts are worried that polysilicon prices will have eased by the time the plants start production, but Lai shrugged it off, saying there was no sign that the price will fall significantly in the near future.
The company has forecast gross margins between 26 percent to 31 percent in 2008, rising to 42 percent to 50 percent in 2009.
To match its ambitious expansion plan, LDK will boost its headcount by more than 50 percent to 10,000 by the end of this year from 6,500 now, he added. (Reporting by Judy Hua, editing by Will Waterman)
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