Key Takeaways:
LONGi Green Energy Technology Co., one of the world's largest solar manufacturers, expects its first-half net loss to widen to as much as 3.8 billion yuan ($560 million), more than double the 2.57 billion yuan loss a year earlier, as China's photovoltaic industry grapples with overcapacity and weakening demand.
"The supply and demand conditions in the photovoltaic industry did not improve evidently, and corporate operations remained under pressure," LONGi said in a filing to the Shanghai Stock Exchange. The company cited insufficient renewable energy consumption capacity and a high base from installation rush demand in the same period last year as factors behind a sharp retreat in China's new solar installations during the first half.
Module sales volume and revenue declined year over year, while insufficient factory utilization rates compressed gross margins, the company said. LONGi also booked losses from investments in associates and foreign exchange losses caused by the yuan's appreciation against the dollar. The company's shares rose 2.2% to 11.99 yuan in early trading Tuesday, a modest bounce that analysts said reflects short-covering rather than a fundamental turnaround.
LONGi's deepening losses underscore the severity of the shakeout sweeping China's solar sector, where panel prices have fallen below production costs for most manufacturers. The Xi'an-based company, which was named to S&P Global Energy's Tier 1 Cleantech Companies list for a second consecutive year this month, now faces the dual challenge of domestic demand weakness and trade barriers in key export markets including the US and Europe. With Chinese solar module prices down more than 40% from a year ago, industry consolidation is accelerating, and smaller players are being forced to idle capacity or exit entirely.
The pain extends beyond LONGi. Flat Glass Co., a supplier of solar glass, warned it expects a first-half net loss of 300 million yuan to 400 million yuan, while Xinyi Solar Holdings Ltd. traded 1% higher in Hong Kong at HK$1.99. The sector's struggles have also weighed on polysilicon producers and wafer makers, with several cutting production to stem cash burn. For LONGi, the path to recovery hinges on whether China's government introduces demand-side stimulus — such as accelerating grid connection approvals or raising renewable portfolio standards — and how quickly global solar demand absorbs the excess manufacturing capacity.
This article is for informational purposes only and does not constitute investment advice.
