NEW YORK --
Suntech Power Holdings Co., the world's largest solar-panel
manufacturer, rose the most in almost a week after temporarily reducing
production capacity to lower costs amid a global oversupply.
Suntech gained 6.6
percent to 93 cents an American depositary receipt (ADR) at the close in
New York, the most since Sept. 11. Each ADR represents one ordinary
share.
Suntech will cut production capacity for solar cells to 1.8 gigawatts, the Wuxi, China-based company said in a statement.
The company said it had 2.4 gigawatts of annual capacity in May when it
released its first-quarter results. It didn’t say when it believes
output would increase again.
The company isn’t reducing its 2.4 gigawatts of
solar-panel production capacity, just temporarily closing the cell
production portion of it. The majority of the approximately 1,500
employees affected will be offered other jobs and the rest will be
fired, according to the statement.
Prices for solar cells dropped 45 percent in the past
year as governments in the U.S. and Europe pared back incentives and
demand slowed. Suntech faces possible
tariffs in Europe, which was the largest market for the products last
year, in addition to anti-dumping duties imposed in the U.S.
The cutback isn’t a surprise and more solar
manufacturers will probably follow suit, said Alex Morris, a research
associate at Raymond James & Associates Inc. in Houston. “Oversupply
has sent prices cratering and margins as well. Right now this is just
scratching the surface of that overcapacity.”
Reducing capacity will lower costs, Suntech’s Chief Executive Officer David King said in the statement.
“With these and other initiatives we target to create a
sustainable business model and return to positive operating cash flow
in 2013,” he said.
Copyright 2012 Bloomberg.
http://www.renewableenergyworld.com/rea/news/article/2012/09/suntech-reducing-solar-panel-prod uction-capacity
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