JinkoSolar passes US$1 billion revenue milestone as margins vanish

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Vertically integrated PV manufacturer JinkoSolar met revised revenue guidance and beat shipment forecasts for 2011. The company posted full-year revenue of US$1.2 billion, the first time the fast-growing supplier has exceeded the US$1 billion milestone, an increase of 58.7% compared to 2010. Product shipments which included wafers, cells and modules reached 950.5MW, a new record and an increase of 97.9% from 2010 levels. Solar module shipments were 760.8 MW, up 183.2%, compared to the prior year. Net loss in the fourth was US$58.3 million.

However, product ASPs declined significantly faster than cost reductions, wiping out gross profit margins in the second half of the year. JinkoSolar’s margins stood at 28.5% in the first quarter of 2011 and ended the fourth quarter at negative 4.4%.

“Our gross margin continued to be affected by declining average selling prices, which continued to fall faster than we anticipated and added pressure to an already uncertain global economic environment. Although the price of polysilicon and other auxiliary materials also fell, the decline was not sufficient to offset our lower ASPs,” commented Kangping Chen, JinkoSolar's chief executive officer.

Revenue reached US$190.4 million in the fourth quarter, down 32.7% sequentially and a decrease of 32.2% year-over-year. Despite increased wafer shipments and steady cell shipments in the quarter, module shipments (169.1MW) were actually down by 22.5% sequentially.

JinkoSolar reported full-year gross profit of US$182.7 million, a 15.3% decline compared to the previous year. Gross margin was 15.6% for the year, compared to 29.2% in 2010.

Production

Previously planned expansions remained on hold through the fourth quarter as in-house annual silicon wafer, solar cell and solar module production capacity remained at approximately 1,200MW in each segment.

Management said that they expected to maintain its in-house production at current levels through to the end of 2012.

With a large percentage of its polysilicon purchasing requirements undertaken on the spot market, the company expected manufacturing costs to continue to fall in 2012. Combined with other cost reduction strategies, JinkoSolar said total module cost-per-watt to fell to US$0.91 in the fourth quarter of 2011, down from US$1.20/W in the first quarter.

Financial guidance

JinkoSolar guided module shipments in the first quarter of 2012 to be in the range of 170MW–190MW, flat to slightly up from the previous quarter.

Full-year module shipments were forecasted to be in the range of 800MW–1,000MW, flat to slightly up from the previous year when module shipments reached 760.8MW. The company said that its PV project development pipeline was expected to be in the range of 100MW–150MW in 2012.

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