* CEO tells Reuters expects 2011 sales to rise

* Proposes 2010 div 0.19 eur/shr vs 0.17 forecast

* 2010 EBIT 193 million eur vs 165 million forecast

* Shares up 10 percent, brokers upgrade

(Adds more background, analyst quote, graphic, updates shares)

By Christoph Steitz

FRANKFURT, Feb 7 (Reuters) – Strong results from German solar energy firm SolarWorld and an upbeat outlook on the U.S. market lifted shares in the battered solar energy sector on Monday.

Profits from the industry number two in Germany, the world’s biggest solar market, beat analysts forecasts by about 17 percent and it predicted higher sales this year — with strong U.S. demand making up for the overcapacity and worries over the future of state subsidies in Germany.

The results and a higher dividend boosted its shares by 10 percent at 1020 GMT. Shares in peers Q-Cells, Roth & Rau, Centrotherm and market leader SMA Solar were also higher, with some reaching their highest level since November.

Analysts at WestLB raised their stance on the company to add from neutral and Credit Suisse also raised its rating.

“We expect the U.S. to develop into the main growth driver for the company in 2011, accounting for up to 30 percent of company’s shipments in 2011,” said Karsten Iltgen, analyst at Credit Suisse.

The positive news chimes with Norwegian solar heavyweight Renewable Energy Corp which last week signalled demand for its products was strong, lifting shares of peers across Europe and the United States, but said it still expected prices for its products to decline.

SolarWorld Chief Executive Frank Asbeck, nicknamed the “sun king” for his outgoing nature, was only cautiously optimistic. “In the current environment, giving a sales outlook is tough,” he said, warning of an expected drop in prices for modules and cells, the solar industry’s main products.

“(However), we are confident that we can increase sales (this year), he said, adding that business in the United States saw a strong start in 2011.




Lavish sector subsidies have helped Germany to become the world’s largest market for solar modules, accounting for about half of global module installations last year and 41 percent of SolarWorld sales.

But the industry was hit hard last year when Germany announced steep cuts in the so called feed-in tariffs (FiT), the sector’s lifeline as long as solar power is more expensive to produce than electricity from conventional sources.

Further cuts this year are expected to cool down demand, forcing solar companies to reduce their exposure to Europe’s largest economy.

SolarWorld said 2010 earnings before interest and tax (EBIT) reached 193 million euros ($262 million), above the Thomson Reuters I/B/E/S estimate of 165 million and proposed a 2010 dividend of 0.19 euros a share, up from 0.16 euros for 2009.

SolarWorld said sales reached 1.305 billion euros, also beating analysts’ expectations. Based on Thomson Reuters I/B/E/S, 2011 sales were seen at 1.515 billion euros.

Asbeck said that his aim was for the share of group sales from outside Germany to rise to about three quarters in the next two years from 59 percent currently.

Prices for modules have been constantly falling because of low-cost competition from Asia. Goldman Sachs has said it expects prices in Europe to decline by 26 percent in 2011.

(Additional reporting by Anneli Palmen in Duesseldorf; Editing by Erica Billingham and Andrew Callus)