Europe will remain China Sunergy’s (CSUN) single largest market for its PV modules this year, despite a selective exodus from EU countries by a number of other China-based module manufacturers before the completion of an investigation into anti-dumping by the EU Commission.

Central to CSUN’s commitment to Europe is due to its joint venture solar cell and module assembly facility in Turkey. Management noted in a call to discuss fourth quarter 2012 financial results that it expected to ship between 550MW and 600MW of modules in 2013, 60% within Europe.

Management said that the facility in Turkey acted as a buffer against anti-dumping rulings imposed on Chinese-made solar cells in the US last year, as well as the possibility of penalties imposed within the EU, due to be announced in early June, 2013. Notably, the facility could be a buffer against penalties imposed anywhere else in the world in the future.

The company reiterated that its first 120MW module assembly line started production in January, 2013 with its first solar cell line (100MW) expected to come on stream in May, 2013. CSUN would become the first Chinese producer to have established both solar cell and module assembly lines within Europe.

However, ReneSola recently said it would outsource to a third-party manufacturer as much as 400MW of modules to meet European customer demand.

CSUN also plans to expand module production further in Turkey. Management said that another 180MW module production line would be established at the facility in July, bringing module nameplate capacity close to 400MW and becoming of the largest producers in Europe.

Most notably, CSUN will use the European facility as a springboard to support its downstream PV project business in both Turkey with its partner and in other European countries. The capital expenditure required to establish a sizable position within the European PV market has been surprisingly low. Management said in the call that total 2012 capital expenditures only amounted to US$44.3 million, which were primarily allocated to the construction of a new R&D facility in China for its high-efficiency QSAR solar cells, rather than for the plant in Turkey.

The shortfall in solar cell production in Turkey, compared to its module capacity would be handled by importing solar cells from Taiwan, according to management as they meet any possible anti-dumping regulations.

Overall production costs were believed to be slightly higher than the equivalent costs in China, though full cost accounting was not expected until the facility was fully ramped. 

Q4 financial results

CSUN reported fourth quarter 2012 revenue of US$54.4 million, an 8.6% decline from the third quarter of 2012. The company said this was primarily due to a combination of lower shipments and lower ASP quarter-on-quarter. Management noted that ASPs for the fourth quarter declined to US$0.64 per watt, a sequential decrease of nearly 10% from the US$0.71 in the previous quarter.

Shipments for the fourth quarter totalled 78.4MW, dominated by shipments to Germany, which accounted for 29% of total revenue in the quarter.  Italy was the second largest market in the fourth quarter, contributing 12.3% of total revenue, followed by France at 11.2%.

As CSUN expands its regional footprint, management noted that both the UK and Japan accounted for increasing revenue during the quarter.

The company reported a gross loss in the fourth quarter of US$2.0 million, with a negative gross margin of 3.7%, compared to a gross margin of 0.7% for the third quarter of 2012.

Full year 2012 results


CSUN reported a significant 48.3% decline in 2012 total revenue, down from US$566.3 million in 2011 to only US$292.7 million in 2012.

The company reported total shipments of 391MW, a 7.0% fall from 420.3MW in the prior year.  Module shipments were 379MW, or 96.9% of total shipments in 2012.

Following the trend of all US listed Chinese PV manufacturers for the year, CSUN reported both gross and net losses for the year. Gross losses were US$1.2 million, and gross margin was negative 0.4%. The company reported a net loss of US$133.6 million, and net margin negative 45.6%.

Production update


Other than being one of the few companies actually expanding capacity in 2013, CSUN said that it had made great strides in its cost reduction and higher conversion efficiency strategies during the year.  

Management noted in the call that the batch average conversion efficiency of its ‘QSAR’ cells remained at 19% in the fourth quarter but actually topped 19.7% in the lab. QSAR production lines were said to have been upgraded in the fourth quarter to accommodate the volume ramp of its ‘QSAR II’ solar cells in January of this year.

As of the end of March, the company said that its average efficiency of the QSAR II production lines reached a new record of 19.2% and peak efficiencies actually surpassed 20%. Management noted that it was targeting average efficiencies of 19.5% for QSAR II production lines in 2013.

In the fourth quarter of 2012, CSUN’s conversion cost of solar cells and modules were said to be at US$0.15 and the US$0.20 per watt respectively, a 35% and 26% drop from US$0.23 and US$0.27 per watt respectively for the same period a year ago.

Management said the target reductions by the middle of 2013, included cell and module conversion cost to US$0.13 and US$0.18 per watt respectively. Additional production efficiencies, an optimized global supply chain higher capacity utilization rates would also contribute to further cost reductions during the year.

Financial guidance

CSUN guided total shipments for the first quarter of 2013 to be in the range of 100MW to 110MW. Gross margin for the first quarter of 2013 is expected to remain at the similar level to that in the fourth quarter of 2012.

The company noted that approximately 20% of full-year shipments would come from its PV projects business.