American Superconductor, a former star of the US clean energy sector, has missed a second deadline for filing its annual report to the securities regulator as it struggles to assess the impact of problems with its largest customer.
The group, which designs and services wind turbines, had previously warned that its reported revenues for the last three-quarters of its financial year ended in March 2011 might have to be restated and that it was carrying out a review of internal controls over financial reporting.
This follows its discovery of “a material weakness with respect to the administration of customer contracts in China”.
It was due to file its annual 10K report to the US Securities and Exchange Commission by the start of June but on May 31 said it could not complete its financial statement in time and had requested an extension of 15 days. That deadline passed last week and the company gave no further indication of when the report might be filed.
American Superconductor’s problems highlight the risks of doing business in China and of over-reliance on a single customer. About three-quarters of its revenues came from Sinovel, China’s largest wind turbine manufacturer.
In April, American Superconductor revealed that the Chinese group had refused to accept any more shipments and failed to pay for shipments during the past year.
American Superconductor’s shares have lost 75 per cent of their value over the past six months. The company indicated in April that its 2010-11 revenues were likely to be less than $355m, compared with the $430m -$440m it had forecast.
In May, Gregory Yurek, who founded the company in 1987, stepped down as chief executive to be replaced by Dan McGahn, the chief operating officer.
Analysts say the dispute with Sinovel represents an attempt to drive down the cost of the contract to the Chinese group, which is facing pressure from intense competition and tighter government regulation.
Theodore O’Neill of Wunderlich Securities, who has a buy rating on American Superconductor’s shares, said the dispute would have to be resolved eventually because Sinovel was reliant on the US company’s parts and services.
“Neither company can survive without the other,” he said. “American Superconductor is embedded in Sinovel.”
The dispute comes amid a broader slowdown in turbine demand in China, which is expected to install only 30,000 megawatts of new wind farms in the next two years compared to nearly 20,000MW in 2010.