Higher shipments hide continued losses at Yingli Green

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Updated: Despite seasonally strong module shipments in the first quarter of 2013, Yingli Green Energy has continued to make relatively heavy net losses.

PV module shipments decreased by only 6.4% from the fourth quarter of 2012, and the company reported net revenue of US$431.4 million in the first quarter of 2013. But it also saw an operating loss of US$52.3 million, representing an operating margin of negative 12.1% and a net loss of US$98.5 million.

Yingli Green previously reported an operating loss of US$181.4 million, representing an operating margin of negative 38.9% in the fourth quarter of 2012, while producing a net loss of US$200.5 million. The company reported close to a US$500 million loss for 2012.

However, Yingli Green noted improving ASPs as markets such as Japan offered higher product pricing. This supported a first quarter overall gross margin of 4.1% and a PV module gross margin of 5.0%, compared to a negative gross margin of 8.5% for the fourth quarter of 2012 and a PV module gross margin of negative 3.5%.

“We are pleased to conclude another quarter with higher than expected shipment volumes and improved gross margin, which we believe further strengthened our leadership position in the global PV market,” commented Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. “Our strong shipment was primarily supported by the strong European and the U.S. markets and the rapid growth of demand in new markets such as Japan.”

“Europe remained strong as a result of the pull-in demand in the first quarter and we continue to see firm demand in Europe in the second quarter. The first quarter of 2013 in the US was our second best quarter ever in terms of shipment volumes and we are going to consolidate our position in all segments of the U.S. market.

“In this quarter, our shipment to Japan increased significantly due to the vigorous demand before the subsidy adjustment in April. We expect that returns on investments will remain attractive, which will continuously drive demand in Japan,” added Miao.

Yingli Green reiterated 2013 PV module shipment guidance to be between 3.2GW to 3.3GW, which represents an increase of 39.4% to 43.7% compared to fiscal year 2012.


Regional sales

On a geographical basis European demand bounced back quarter-on-quarter and accounted for 53% of sales in the first quarter, up from 46% in the fourth quarter of 2012, but below the 60% of sales in the third quarter.

Management noted in a call to discuss quarterly results that strong demand in Europe in the quarter was higher than expected partly due to a pull-in of demand to beat UK ROC tariff regression for utility-scale projects, while pending EU anti-dumping duties may also have been a factor.

Management said in the call that sales by volume to China accounted for around 20% in the first quarter, US 14% and Japan 13% of sales. The company guided that in the second quarter, sales to Europe would fall from 53% in the first quarter to around 35%. China, which was picking-up strongly from a cold winter and the holiday period would account for around 35% of sales.

In respect to the US, management noted that it expected sales to double in 2013, with growth starting in the second quarter and reaching 22% of sales. Although the company reiterated the strong demand seen in the Japanese market it didn’t provide guidance in the call as to the expected sales volumes for the second quarter.

However, on a full-year basis, Yingli Green expects the EU to account for roughly 35% of sales, US 20% and China in the range of 25% to 30%. The company also noted that ROW would be in the range of 15% to 20%.

Project pipeline

Although Yingli Green did not provide a PV project pipeline backlog figure, management reiterated the strength expected in China and various large-scale projects that were ongoing in its domestic market.

The company reiterated it had succeeded in bidding for supplying 220MW modules for China Power Investment Corporation and had secured 70% of its targeted China market shipment in 2013.

In Canada, the company reiterated that it had Achieved IEC and CAN CSA certifications for Ontario-compliant module manufacturing and was now expecting to fulfil its 120MW Canadian pipeline, starting this year.


Not surprisingly the issue of a return to profitability was raised by analysts on the call, especially after losses close to US$1.0 billion had been incurred over the last two years.

Importantly, management pointed to guidance on improving second quarter margins and ASPs that were expected to continue that trend throughout the second half of the year.

Yingli Green had guided second quarter gross margins to be in the range of 9% to 11%, up from 4.1% in the first quarter of 2013. Gross margin improvement and positive operating margins were claimed to being supported by further manufacturing material cost declines, notably polysilicon but also by conversion efficiency gains.
Blended polysilicon costs were expected to be in the range of US$20/kg in the second half of the year, down from the low US$20/kg range in the first quarter of 2013.

Overall non-silicon production costs reached US$0.47/W in the first quarter, only down one cent. However, management guided that non-silicon production costs would fall to around US$0.45/W by year-end.

Management also said in the call that module capacity in China could be expanded by a few hundred megawatts to meet demand and that shipment guidance could be raised in the second half of the year.

Putting all these factors together would lead the company back to profitability by the end of the year, according to the company.



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