Citing 'worse than anticipated market conditions and inventory provisions,' JA Solar reported a revenue decline of 26.7%, to US$413.0 million, compared with the first quarter of 2011, when revenue was US$563.7 million. As previously guided under recently revised figures, shipments were 401MW, an increase of 28.9% year-over-year but a decrease of 11.1% sequentially. JA Solar reported negative gross margin of 2.7%, compared to 17.3% in the first quarter of 2011, with an operating loss of US$31.3 million and operating margin of negative 7.6%. Demand pick-up in the third quarter is expected to produce shipments of solar cells and module in the range of 450MW-470MW, but the company revised downwards full-year shipment forecast from 2.2GW to 1.8GW, equivalent to second-quarter actual shipment levels.
Inventory writedowns caused by higher cost cell and wafer inventory, as industry wafer prices dropped by at least 40% in the quarter, were valued at approximately US$28 million, less than some financial analysts had calculated.
However, the company reported a gross loss of US$11.1 million in the second quarter, compared with gross profit of US$97.5 million in the first quarter of 2011. Operating loss in the second quarter was US$31.3 million, compared with operating income of US$84.4 million in the first quarter.
“Our second-quarter results reflect the market disruption that resulted from generally lower than anticipated installation levels in Germany and recent policy changes in Italy,” noted Peng Fang, CEO of JA Solar. “Despite that challenging environment in the European market, demand for our high-efficiency, low-cost products remained healthy and ensured that we met our shipment goals. However, our gross margin and bottom line have been impacted by worse than anticipated market conditions and inventory provisions.”