LDK Solar's revenue drops in Q2

XINYU CITY, CHINA & SUNNYVALE, USA: LDK Solar Co. Ltd, a leading manufacturer of multicrystalline solar wafers, reported its unaudited financial results for the second quarter ended June 30, 2009.

All financial results are reported in US dollars on a US GAAP basis.

Recent highlights:
-- Second quarter 2009 revenue was $228.3 million;
-- Shipped 231.7 MW of wafers, up 20.9 percent year-over-year;
-- Secured an RMB500 million (equivalent to approximately $73 million) short-term loan from The Export-Import Bank of China, and anRMB 500 million three-year loan from Huarong International Trust Co. Ltd;
-- Reached mechanical completion of the first 5,000 metric ton (MT) train in its 15,000 MT annualized capacity polysilicon plant in Xinyu, China.

Net sales for the second quarter of fiscal 2009 were $228.3 million, compared to $283.3 million for the first quarter of fiscal 2009, and $441.7 million for the second quarter of fiscal 2008.

For the second quarter of fiscal 2009, gross profit was negative $205.5 million, compared to $4.9 million in the first quarter of fiscal 2009, and $112.3 million for the second quarter of fiscal 2008.

During the preparation of its second quarter 2009 financial results, LDK Solar's management determined that an inventory write-down and loss on firm purchase commitments of polysilicon materials of approximately $175.8 million and $16.7 million, respectively, was required as a result of the continued rapid market price decline for solar wafers.

As a result, gross margin and results from operations were negatively impacted in the second quarter of fiscal 2009.

Gross margin for the second quarter of fiscal 2009 was negative 90 percent, compared to 1.7 percent in the first quarter of fiscal 2009 and 25.4 percent in the second quarter of fiscal 2008.

Loss from operations for the second quarter of fiscal 2009 was $235 million, compared to a loss of $16.1 million for the first quarter of 2009, and compared to income from operations of $100.3 million for the second quarter of fiscal 2008.

Operating margin for the second quarter of fiscal 2009 was negative 102.9 percent compared to negative 5.7 percent in the first quarter of fiscal 2009 and 22.7 percent in the second quarter of fiscal 2008.

Excluding the inventory write-down and loss on firm purchase commitments of polysilicon materials, gross profit was negative $13.0 million, or a gross margin of negative 5.7 percent for the second quarter of 2009 and loss from operation was $42.5 million, or an operating margin of negative 18.6 percent for the second quarter of 2009.

Income tax benefit for the second quarter of fiscal 2009 was $29.5 million, compared to income tax benefit of $1.6 million in the first quarter of fiscal 2009.

Net loss for the second quarter of fiscal 2009 was $216.9 million, or $2.03 per diluted ADS, compared to a net loss of $22.5 million, or $0.21 per diluted ADS for the first quarter of fiscal 2009.

LDK Solar ended the second quarter of 2009 with $265.7 million in cash and cash equivalents and $123 million in short-term pledged bank deposits.

"Our results for the second quarter of 2009 reflect the prevailing operational challenges for the solar industry. The continued decline in prices for solar wafers impacted our top and bottom lines and required an additional inventory write-down for the company, which significantly impacted our margins in the second quarter," stated Xiaofeng Peng, Chairman and CEO of LDK Solar.

"As part of our ongoing efforts to realign our near-term strategy and operations with current industry dynamics, we remained focused on improving our cost structure, increasing wafer sales and ramping up polysilicon production.

"During the second quarter, we took a measured approach to capital spending and proceeded with implementing our curtailed manufacturing expansion plans. We believe this approach allows us to improve our strategic positioning while continuing to best serve our customers.

"We continued to ramp our polysilicon production and also achieved mechanical completion for the first 5,000 MT train of our 15,000 MT plant. Construction is proceeding as planned and we look forward to the cost savings benefits that we will realize once larger scale in-house polysilicon production commences," continued Peng.

"We are encouraged by a number of recent developments in the solar industry. Demand for solar wafers is beginning to turn more positive. The current momentum surrounding China's Golden Sun solar subsidy program reflects the long-term confidence in the local solar industry.

"We believe that we are well positioned during this critical early stage of development of the PV industry in China, and we are pleased to be negotiating contracts for a number of local projects. During the quarter, we also made significant strides in further diversifying our business by collaborating on a number of PV development projects, particularly in the fast growing European markets.

"As we continue to evolve as a leader in the solar industry, we look forward to expanding our growth opportunities once we overcome the near-term industry challenges," concluded Peng.

Business outlook
The following statements are based upon management's current expectations. These statements are forward-looking in nature, and the actual results may differ materially. You should read the "Safe Harbor Statement" below with respect to the risks and uncertainties relating to these forward-looking statements.

For the third quarter of fiscal 2009, LDK Solar estimates its revenue to be in the range of $240 million to $270 million with wafer shipments between 260 MW to 300 MW and module shipments between 10 MW to 20 MW.