Shares in Jetion Solar Holdings (LON:JHL) tumbled by 28% to 71p this morning after the Chinese solar cell manufacturer reported a 30% fall in full year sales to US$176.8m in the year to December 2009, although pre-tax profits were up 6% to US$21.3m. Of greater concern to investors was a warning by the company that its current trading was being adversely affected by the weakness of the Euro, with almost 100% of sales of solar modules currently heading into Europe. As a consequence, results for the half year to June 30, 2010 are expected to show lower year-on-year profits, although sales volumes are expected to be some 130% higher.
The company blamed the slip in 2009 sales on a fall in both cell and module average selling prices from US$3.87 per watt for 2008 to US$1.73 per watt. However, this was partly offset by an improvement in gross margin from 16.3% to 23.4% during the year, which was reflected in the improved profit performance. During the year the company maintained its solar cell manufacturing capacity at 100MW per annum, while annual production output was up 48.7% to 97.1MW. Elsewhere, Jetion’s solar module manufacturing capacity increased to 75MW per annum, while annual production output rose by 30.0% to 56.3MW.
Last June the company was forced to fire its chief executive and three senior managers, claiming that they had connections to a rival firm. COO, Alina Xu was subsequently promoted to chief executive in December. In the aftermath of these problems Jetion launched an extensive review of its sales strategy, sales channel structure and market segmentation in order to maintain a strong market position and order flow.
Commenting on today's results, Jetion’s chairman Gabriel Kow, said: “I believe that in 2009 Jetion Solar demonstrated by its performance, in the face of the extremely difficult economic environment and trading conditions, that it has the strength and depth of management, systems and controls to be a major player in the solar industry. However, although we have a growing order book and will have the production capacity to satisfy those orders our profitability in 2010 will be largely determined by the performance of the Euro during the remainder of the year.”
Anyone looking to catch this falling knife in anticipation of the Euro bottoming out soon?
With Spain downgraded by Fitch earlier today(sayonara triple AAA rating),and inevitable subsequent Euro weakening there must come a point where the Euro is close to bottoming out - just how much further can it fall?
JHL's performance has been decimated by a weak Euro apparently so its resurgence, one expects, will be tied to any rebound in the Euro currency.
After all, they do sell a high quality product with a long term future, albeit one severely impacted by a weak currency where their sales are predominantly, if not exclusively,based.
A 30% fall today, one which is, to a great degree, currency translation based, always interests......
Anyone thoughts?
