Solar recovery to start, but 2010 outlook dim

FRANKFURT (Reuters) – European solar equipment makers are slowly emerging from the crisis that has hit the sector, quarterly results will show, but the outlook beyond 2009 will be uncertain due to tight credit and oversupply.

Europe’s solar companies are expected to show signs of recovery when third-quarter earnings kick off next week, with analysts expecting capacity adjustments and the shift of production abroad to benefit companies.

European solars, along with their U.S. and Chinese peers, have to deal with a toxic mix of oversupply of cells and modules as well as a credit squeeze that has triggered a wave of quarterly losses and outlook cuts in the funding-hungry sector.

In addition, Asian competitors that are producing at much lower prices have put heat on their European peers, which are burdened by high labor costs.

But the worst could be over for Europe after companies wrote down the value of their inventories, slashed jobs and shifted production abroad in a bid to stay competitive.

Reuters