The still embryonic nature of the solar energy industry was underlined yesterday after one of Germany's largest solar companies issued its second profit warning within two months and announced major restructuring plans.

Shares in Hamburg-based Conergy AG slumped by about 20 per cent after the company admitted pre-tax losses were likely to be between €150m and €200m, compared with an earlier forecast of €10m. The company also said that it was likely to miss its revenue target of €1bn.

Conergy said that a write down of assets, a change in its accounting policies and issues with suppliers had combined to deliver the poor performance.

Dieter Ammer, the new chief executive who was appointed last month in the wake of the previous profit warning, announced a major restructuring programme that will see the firm's 2,500 headcount cut by a fifth.

The new strategy will also see the company sell off its "non-core" activities in the areas of bioenergy and heat pumps.

"Conergy will focus on its profitable activities, will be structured more efficiently and will make one-time writedowns and changes to its accounting policies in order to put its accounting on a more conservative footing" said Ammer. "We believe that with these measures we have put the company on a strong footing for the coming years."

The news is likely to be seen as a considerable blow to investor confidence in the burgeoning renewables sector, which has seen soaring sales growth but remains populated by early stage companies, some of which have struggled to cope with the rapid expansion experienced in recent years.