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Sluggish Solar Demand in Japan Cause Sale Decrease and Bankruptcies [updated]

published: 2016-11-01 18:10

Japan’s solar companies have been struggling against falling domestic demand, while the global selling price decline of PV modules starting from this July further put pressure on this situation. Solar giants Panasonic and Kyocera both reported business decrease. In the meantime, a Japanese market research firm expected that the number of bankrupted solar companies could reach a new peak in 2016.

Sales slump in giant companies

Kyocera’s Applied Ceramic Products Group covers the company’s solar business. In the second quarter of FY2017, the Group’s quarter sales decreased 14.9% from the previous quarter to 52.35 billion yen, representing 14.4% YoY decline.

Kyocera stated, in the solar energy market, the selling price of solar modules continued to erode worldwide and demand decreased due to the impact of a reduction in purchase price under the feed-in tariff in Japan. However, the company expected that solar sales will return to be strong in the fourth quarter of 2016.

On the other hand, Panasonic’s ECO Solution Division, which runs the solar business, reported sales of 725.9 billion yen for the first half of its fiscal year 2017 (ended September 2016), down 5% YoY. Nonetheless, the segment profit from the year period rapidly declined from 33.5 billion yen in the first half of Panasonic’s fiscal year 2016 to 20.9 billion yen, representing a 40% YoY fall.

Panasonic accounted the sale decline for weak domestic demand to solar systems as well as the price falling of PV modules. Panasonic also revised down its financial guidance for fiscal year 2017, partially due to the segment’s weak performance.

Numbers of bankruptcy rose in Japan

Tokyo Shoko Research, a market research firm based in Tokyo, Japan, revealed that 42 solar-related companies went bankrupt during January and September 2016 in Japan, up 10.5% compared to the first nine months of 2015. Accordingly, the total number of solar company bankruptcy could reach 54 by the end of 2016 – the highest since 2000.

The research firm’s report also unveiled that the total debt of solar-related companies has reached approximately 18.5 billion yen by the end of September 2016, up 10.9% year-on-year, and was close to the peak debt of 21.35 billion yen reached in 2015.

It is possible that the 2015 debt peak would be exceeded this year because of the higher bankruptcy number, noted the research firm.

Cases in debt category of 10~50 million yen increased from 2015’s 10 to 2016’s 13, and the 30% boost rate was the highest among all debt categories. This represented the overall influence on Japan’s solar market regardless of the size of companies.

As the Japanese government keeps reducing its feed-in tariffs rates on schedule, the country’s solar industry will reach the turning point very soon. Companies that are unable to strengthen themselves and that are unable to integrate businesses for better operational effectiveness will be very likely to be weeded out from the market. As a result, Tokyo Shoko Research forecasted more medium- and small-scale solar companies to diminish in the upcoming market transformation.

(Corrections: fiscal year defination and Kyocera's quarter sale for 2QFY17)

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