Q-Cells, which has struggled to deal with a market slump, said Thursday it is cutting 500 jobs and implementing other measures to reduce production costs by 25 percent.
The Germany company, one of the world's largest solar cell makers, said it needs to take steps to shore up capital and narrow its focus on its core businesses after delivering a lackluster financial performance for the first six months of this year.
The job cuts would reduce the company's workforce by roughly a fifth.
Q-Cells saw its six-month revenue fall 36.8 percent to €366.2 million ($522.8 million) from €579.5 million ($827.3 million) in the year-ago period. It recorded an operating loss of €47.6 million ($67.9 million), compared with an operating income of €119.1 million in the first six months of 2008.
The company said it posted a net loss of €696.9 million ($994.8 million) when it included the €600.9 million ($857.8 million) write-down from the sale of its shares in Renewable Energy Corp. (REC).
Q-Cells is shutting down older production lines at its factory in Thalheim because it no longer has the scale or technical ability to make cells at least as cheaply as its competitors, the company said.
The company had implemented cost-cutting measures before it announced the job cuts and financial results on Thursday. Back in April, the firm said most of its staff would work shorter hours.
Q-Cells hasn't been immune to the same market forces that have pummeled other players in the solar market.
The solar industry moved from a boom in 2008, when companies worked quickly to boost production, to a bust in 2009. The credit crunch has made it difficult for developers to line up money to build solar power plants. The global market is so saturated with unused solar panels that one research firm recently predicted that the glut would last until 2012.
The prices of silicon, the raw material used to make most of the solar panels on the market today, have fallen sharply (see Contract Silicon Price Falls 50%, Close to Spot Price).
Solar cell pricing fell about 20 percent from the first quarter to the second quarter this year, Q-Cells said. The company said the contracts it has signed with its wafer suppliers have become too expensive.
Production volume remained flat at 272.2 megawatts for the first six months, Q-Cells said.
Three Chinese solar companies posted mostly depressing financial results on Wednesday. In particular, LDK Solar, a silicon wafer maker and a Q-Cell supplier, widened its second-quarter loss and posted a negative 90 percent gross margin.
Some solar companies are doing a better job of surviving the tough times. First Solar has continued to post revenue and profit gains while SunPower moved to a profitable second quarter after posting a loss-ridden first quarter.
The solar industry is hoping that the market will improve noticeably in the second half of this year.
The Federal Reserve in the United States suggested this week the economic downturn has hit the bottom, and it should be on its way to recovery. Economic data from Germany and France also indicated that the recession might be over for those countries.