Subsidies cut sends German renewables in 3Q decline

As Germany continues its path of lowering key subsidies to the renewable industry, solar and wind energy companies are expected to return worsening business results for 3Q2011.

SolarWorld, Q-Cells and Nordex are forecast to either post considerable losses or free-falling profits. SolarWorld is expected to report a 55% drop in operating profits to EUR23.2m (US$31.5m) while peer Q-Cells should see an operating loss of EUR42m. Wind turbine maker Nordex is anticipated to see its EBIT for the third quarter contract from EUR10.2m to EUR3.62m YoY.

“We have already seen many profit warnings in the industry,” Deutsche Bank analyst Alexander Karnick said. “(Prices) continued to drop, demand has not picked up, margins deteriorate and inventories are building up.”

Industry benchmarks such as SMA Solar, Suntech and First Solar are seeing solar module prices contract by 40% this year, squeezing their profit margins.