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To overcome the threat of duties being imposed on Chinese imported cells and modules into the EU and a concerted effort to expand sales in North America, China Sunergy said it was planning cell and module manufacturing operation in both regions. Management highlighted the move in a conference call to discuss second quarter results. China Sunergy reported a loss of US$30.3 million, a negative margin of 27.4% on revenue of US$110.4 million, up 61.2% over the first quarter of 2012 on increased demand from key markets, Germany and Italy.
Shipments for the second quarter were 150.3MW, including 144.5MW of solar modules. Europe remained China Sunergy’s main market with Germany contributing 27.5% of revenue, Italy 23.5% and Bugaria providing 9.4% of revenue in the quarter. Overall, Europe was responsible for 82.4% of revenue, up from 69.6% in the first quarter.
The company also noted that Australia generated 9.2% of revenue and China 6.2% of revenue in the second quarter.
However, the company expected third quarter shipments to fall significantly after FiT changes in key markets, while the company continues to be loss-making.
China Sunergy said that shipments are expected to be in the range of 80MW-85MW and significantly lowered full-year shipment guidance from between 500MW-550MW to between 400MW-420MW.
Management noted in the call that is was in the process of selecting locations and partners to establish a cell and module plant in the US as it established both a direct sales unit in the country as well as having recently signed a leasing and financing contract to support its growth plans, especially for the commercial rooftop market, which could generate at least 30MW of installations in the second-half of the year. No further details were provided on the US manufacturing plans.
However, management also said that in the event of anti-dumping duties being imposed within the EU, the company has plans prepared to locate cell and module manufacturing operations in Turkey. Again, no further details were provided in the call.
China Sunergy also spent time discussing its higher performance technology, QSAR, noting that 12MW of QSAR modules were shipped in the second quarter. Currently, the company said that it only had a single 35MW line in operation for the QSAR technology, but would have 2 more lines completed (35MW each) in December, 2012 and a 35MW R&D line ready in October when its new R&D facility becomes operational. In total, China Sunergy said that it would 140MW of QSAR technology capacity operational by year-end.
However, the company had said in a November, 2011 conference call that the 140MW QSAR capacity would be in place by the end of the first quarter, 2012. The company claimed that its average QSAR conversion efficiency rates were stable at 18.8% with the highest batch reported at 19.4% efficiency.
Jianhua Zhao, Chief Technology Officer at China Sunergy highlighted that with the new R&D centre opening in the fourth quarter the company would have the capabilities to produce new types of advanced cells that would be targeting 20% cell efficiencies.
CapEx was said to have been US$10.7 million in the second quarter, mostly for the expansion of cell and module lines.
With ASPs continuing to fall faster than manufacturing cost reduction initiatives, emphasis was place cost reduction execution. Management said that ASPs were US$0.75/W at the end of the second quarter, US$0.11 lower than the previous quarter and that prices continued to fall.
