JinkoSolar guides module shipments ahead of capacity

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Despite reporting a full-year loss of around US$248 million, JinkoSolar guided module shipments in 2013 to exceed its nameplate capacity of 1.2GW.

Like other Chinese tier 1 module manufacturers, JinkoSolar is refraining from adding new capacity, despite the growth in demand as cash preservation remains a key goal after heavy losses in 2012.

The company reported fourth quarter sales of US$187.3 million, a decrease of 12.2% from the third quarter of 2012.

Total solar product shipments were 301.9MW, consisting of 252.3MW of modules, 25.3MW of silicon wafers and 24.3MW of solar cells, representing a decrease of 9.9% from 335.2MW in the third quarter of 2012. 

However, in the fourth quarter, JinkoSolar continued to be impacted by declining ASPs, as well as reduced earnings from module sales to Chinese state-owned enterprises due to sales contracts with ‘retainage’ terms. JinkoSolar noted that these customers were allowed to withhold payment of 5% to 10% of the full contract price for between one to two years, typically.

As a result, the company revised its total revenue for the third quarter of 2012 to RMB1.33 billion by deferring RMB59.8 million from the retainage contracts. The total amount not recognised as revenue were RMB59.8 million and RMB62.0 million for the quarters ended 30 September 2012 and 31 December 2012, respectively.

Gross margin was a positive 3.8%, down from 5.8% in the third quarter of 2012. Loss from operations was US$117.8 million in the fourth quarter.

The company noted that inventory levels were low at US$84.7 million as of December 31, 2012, a decrease of approximately US$50.9 million from September 30, 2012.

Kangping Chen, JinkoSolar's chief executive officer said: “As the European economies continue to struggle, we are focused on diversifying our presence in emerging solar markets such as China, Japan, the United States, South Africa and India. Although we entered the Japanese market relatively late, we have established a considerable market presence and become a serious competitor in the market. With more than 100MW worth of shipments to Japan already signed, we are confident about future opportunities as we adjust our strategy to Japan's rapidly maturing market. We also expect the United States market to account for a large portion of the global growth in the coming year. Having adjusted our strategy to accommodate the AD/CVD tariffs, the United States' market is poised to contribute a considerable portion of our growth.”

2012 results

JinkoSolar reported total solar product shipments in 2012 of 1,188.3MW, consisting of 912.4MW of solar modules, 197.4MW of silicon wafers and 78.5MW of solar cells, an increase of 25.0% from 950.5MW for the whole of 2011.

Manufacturing

JinkoSolar retained wafer, cell and module capacity at 1.2GW each in 2012. However, the company said it had reduced manufacturing costs each quarter, resulting in non-silicon costs of US$0.45/W in the fourth quarter of 2012, compared to US$0.58/W in the first quarter of 2012. Total cost per watt fell from US$0.74 in the first quarter of 2012 to US$0.54/W in the fourth quarter.

Management said in a conference call to discuss financial results that it expected non-silicon costs to fall at a lower rate than in 2012 with around US$0.04 to US$0.05 cost reduction by the end of 2013. Total costs are expected be around US$0.52/W to US$0.53/W.

With management guiding module shipments of between 1.2GW and 1.5GW for 2013, JinkSolar said it would outsource module production as required, noting in the call that excess production capacity still existed in China which could be tapped to meet guidance.

In the first quarter of 2013, JinkoSolar said that it expected total solar module shipments to be approximately 270MW to 300MW.

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