Cheaper polysilicon and manufacturing cost reductions helped JinkoSolar retain gross margins while generating record revenue on record shipments in second quarter of 2011. Total solar product shipments (majority being modules) were above previous guidance at 254.1MW, compared with 208.4MW in the first quarter of 2011. Total revenues were also a record US$350.6 million, an increase of 5.9% sequentially and 151.6% year-over-year. JinkoSolar noted that it had expanded its in-house annual silicon wafer, solar cell and solar module production capacity from approximately 900MW each as of March 31 to approximately 1,100MW each as of June 30.
JinkoSolar reported a gross margin of 25.4%, compared with 26.2% in the first quarter of 2011 and 26.9% in the second quarter of 2010. The company attributed the holding of margins to lower polysilicon prices, which included 80% of purchases from the spot market. Management noted in the call that it expected to continue to benefit from falling polysilicon prices through to the fourth quarter of 2011.
The company also benefited from low cost manufacturing and other cost reduction strategies, including building its own module junction boxes in-house.
Sales were boosted by focus on key customer markets of Europe, especially Germany and Italy, but management noted in a conference call to review financial results that sales growth had been supported by having 60 customers in 20 countries and that it had added 30 new customers in the second quarter alone.
In-house gross margin was reported at 30.5%, compared with 31.0% in the first quarter of 2011 and 32.9% in the second quarter of 2010. Income from operations was US$63.4 million, a decrease of 2.3% from the first quarter of 2011 and an increase of 172.0% from the second quarter of 2010. Net income was US$36.4 million, a decrease of 30.1% sequentially and an increase of 30.2% year-over-year.
“While the solar market did face some difficulty in the second quarter, we believe that it presents a unique opportunity for us to leverage our vertically integrated business model to maintain the superior quality of our products and to ensure our cost advantages,” commented Kangping Chen, JinkoSolar's CEO. ”Our record shipments of 254.1MW this quarter speak to the value that our customers continue to see in our products. Our geographic reach continued to expand and we have broadened our customer base while maintaining strong relationships with our existing customers in key markets such as Italy and Germany. Meanwhile, we pushed deeper into the US market where we expect to see increased growth in the near future and made significant progress in increasing sales in Spain, Portugal, Australia and France. “
Growing demand but intense competition characterised the second-half-year guidance from management. JinkoSolar said that it expected total solar module shipments to be approximately 230MW to 250MW. Total revenues are expected to be approximately US$310 million to US$330 million.
JinkoSolar guided that in-house annual silicon wafer, cell, and module production capacities to reach approximately 1.3GW each by the end of the third quarter of 2011.