JA Solar’s sales booming in Japan as Europe wanes

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Higher than guided product shipments, notably to higher average selling price (ASP) regions such as Japan, supported a significant drop in quarterly losses at JA Solar in the first quarter of 2013.

The Chinese manufacturer reported total product shipments of 442.7MW, exceeding the high end of previous guidance of 430MW, though representing a decrease of 11.5% from the fourth quarter of 2012. PV modules accounted for 248MW of shipments, while solar cell shipments stood at 189.5MW.

Management noted in a conference call to discuss quarterly results that 60% of revenue in the first quarter came from cell and module sales.

Importantly, gross margin was positive 6%, compared to gross margin of negative 4.6% in the fourth quarter of 2012, while JA Solar reported an operating loss US$13.7 million, compared to an operating loss of US$79.5 million in the fourth quarter of 2012.

Its operating margin was negative 5.1% in the first quarter of 2013, compared to negative 29.6% in the fourth quarter of 2012 and negative 9.9% in the first quarter of 2012.

JA Solar reported net revenue in the first quarter of 2013 of US$270.0 million, 0.4% higher than the previous quarter. The company noted that the slight sequential increase in net revenue despite the shipment volume decline was primarily due to a strategic decision to shift sales focus on key higher average selling price markets such as Japan.

Baofang Jin, executive chairman and CEO of JA Solar, said: “Shipments exceeded the high end of guidance in the first quarter thanks to solid sales across our key markets, particularly in regions with higher ASPs, resulting in improved gross margins and a significant reduction in net loss. We performed especially well in Japan, a high-ASP market, which accounted for a record 38% of our module shipments in the quarter, while module sales to China declined from last quarter due to seasonality and our shift in focus to markets with more attractive margins. We also made further inroads into emerging markets, including in the Asia Pacific, the Middle East, and Africa.”

Japan market booming

Having previously touted Japan as being one of its key markets for the future, JA Solar noted in the call that APAC shipments in the first quarter were very high, with the majority of APAC deliveries in the quarter going to Japan.

Management also said in the call that shipment volumes to Japan were sustainable as strong demand is expected to continue through the year and that first quarter shipments to the country were actually greater than total shipments to Japan in the whole of 2012.

JA Solar said that APAC would represent 30-40% of module shipments in 2013. On an annual basis, management said in the call that module shipments within China would account for around 20% of total shipments in 2013.

European market waning

JA Solar said in the call that the company had been gradually reducing its exposure to the European market, which had previously been its main target market for modules.

In 2011, 61% of module shipments went to Europe and in 2012 44%, equivalent to approximately US$176 million in annual revenue last year, according to analysis of its 2012 annual report.

However, JA Solar said that the European market would account for no more than around 20% of module shipments in 2013. Shipments to Europe in first quarter of 2013 were around 27% of shipments, which would decline sequentially throughout the year, according to the company.

Selective selling

JA Solar reiterated that low margin business, especially in China would not be the priority for the company this year. Module shipments within its domestic market had been curtailed significantly from the fourth quarter of 2012, from around 50% of shipments to only around 14% of shipments in the first quarter of 2013.

The same approach is being used in relation to its PV project plans, which are being pegged conservatively at around 50MW to 100MW in 2013.

The company expects total shipments in the second quarter to be between 410MW and 430MW, with shipments remaining basically flat in the second half of the year, suggesting capacity constraints.

JA Solar reiterated full-year guidance of total shipments of between 1.7 GW to 1.9 GW.
 

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