JA Solar warns of negative gross margin in 2Q results as prices fell more than expected

The optimism from the first quarter was short-lived at JA Solar, which has warned investors that ASPs declined faster than expected in the second quarter, negatively impacting gross margins. Coupled to ‘high-cost inventory provisions,’ gross margins are expected to be in a negative low single digit range,' according to a company statement.

“Despite a challenging market environment as a result of changes in solar subsidy regulations in Italy and slower than expected growth in market demand in Germany, we met our shipment targets for the second quarter. Our gross margin was negatively impacted by a worse than anticipated decline in average selling prices, and the impact of high-cost inventory provisions for the quarter,” said Dr. Peng Fang, CEO of JA Solar. “Since July, we have seen promising signs that both orders and volume shipments have increased across our diverse customer base. Geographies such as Germany, the United States and China are expected to be particularly strong in the second half of this year. With demand for our high-efficiency products growing, we expect shipment volumes to increase significantly in the second half of this year compared to the first half. As market conditions stabilize, we continue to execute on our accelerated cost reduction roadmap and we expect gross margins in the second half of the year to improve significantly from second quarter levels.”