Against a backdrop of many peers reporting lower fourth quarter shipments when compared to the previous quarter, ReneSola held its ground, exceeding shipment guidance for solar wafers and modules. The company reported 2011 revenue higher than guided at US$985.3 million but 18.3% below 2010 net revenue of US$1,205.6 million. Total solar wafer and module shipments in 2011 reached a record 1,294.8MW, exceeding prior guidance and an increase of 9.5% from 1,182.8MW for the full year 2010. However, management guided a significant increase in solar wafer and module shipments in 2012 to be in the range of 1.8GW to 2.0GW. Emphasis was placed on module shipments increasing as well as doubling capacity to 1GW.
“Challenging market conditions continued to impact our business in the fourth quarter of 2011,” noted Xianshou Li, ReneSola's chief executive officer. “The continuing uncertainty surrounding Europe's economy and proposed austerity measures exacerbated the supply-demand situation, negatively impacting our revenues and margins for the quarter, despite near-record shipments including significantly increased module shipments. Although we achieved our year-end cost-reduction targets, which placed our cost structure among the lowest in the industry, it was not enough to offset extremely low solar wafer and module prices.”
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ReneSola reported fourth quarter revenue of US$187.7 million, a 0.7% decline from US$189.1 million in Q3 2011. The company reported a gross loss of US$43.4 million with a gross margin of negative 23.1%, compared to gross loss of US$7.7 million with a gross margin negative 4.0% in Q3 2011.
Total net loss for the quarter was US$36.7 million. Losses were due to falling ASPs and inventory write down due to falling polyslicon prices. The company reported with solar wafer ASP of US$0.36 per watt and a module ASP of US$0.97 per watt.
Solar wafer and module shipments in the fourth quarter reached 339.9MW, an increase of 3.5% from 328.5MW shipped in the previous quarter.
2011 results
For the full-year, ReneSola reported revenue of US$985.3 million, down 18.3% from the prior year, due to ASP decline of both wafers and modules. Full year 2011 gross profit was US$96.1 million with a gross profit margin of 9.7%, compared to a gross profit of US$348.0 million with a gross margin of 28.9% in 2010.
Operating income was US$11.5 million with an operating margin of 1.2%, compared to an operating income of US$245.9 million with an operating margin of 20.4% in 2010. Full year 2011 net income was US$0.3 million.
Total solar wafer shipments in 2011 increased 14.3% to 1,014.1MW, due to increased demand for its quasi-mono Virtus wafers. However, module shipments declined 4.9% in 2011 to 280.7MW as a result of the relatively weak market and Europe's challenging financing environment, according to the company.
Production
The company reported CapEx for the quarter at US$34.1 million and US$135.3 million for the full year. Spending focused on increasing and quasi-mono Virtus wafer production capacity in 2011, which resulted in all of its 1.6GW multicrystalline production capacity being switched to Virtus. The company has also retained 400MW of monocrystalline wafer capacity but expects to maintain both wafer types capacity at 2011 levels this year.
ReneSola said that it planned CapEx in 2012 to be approximately US$100 million, which will target polysilicon production capacity (Phase II) that will add 6,000MT, bringing capacity to 10,000MT.
Further module capacity expansion in 2012 is planned. At the end of 2011, ReneSola’s module capacity reached 500MW. Though contingent on demand and guidance for the year, it plans to reach a capacity of 1GW by year-end as it guided module shipments of at least 600MW in 2012.
On a production cost level, its internal polysilicon costs declined to approximately US$30/kg by the end of Q4 2011, compared to US$35.70/kg at the end of Q3 2011. Supporting the cost reduction drive is the Phase II expansion, which is expected to provide a polysilicon production cost of US$24/kg by the end of 2012.
At the end of Q4 2011, the company said that module processing costs were approximately US$0.42/W, compared to US$0.44/W at the end of Q3 2011.
Guidance
ReneSola expects total solar wafer and module shipments to be in the range of 400MW to 420MW in the first quarter of 2012. Revenue is expected to be in the range of US$180 million to US$190 million.
“For 2012, we will continue to invest in research and development to further reduce our costs and improve efficiency. While we expect to maintain our leadership position in wafer production, we will increasingly focus on our high-margin module business, capitalizing on our reputation, product quality and new regional teams, to increase sales. We will continue to invest heavily in our in-house polysilicon production, which achieved costs close to the record-low spot prices of December and lower than many of our competitor's long-term polysilicon contracts. As part of our cost-reduction strategy, we will also explore horizontal opportunities like our diamond-steel wire production, which began in the fourth quarter of 2011. We are confident our cost-reduction efforts will help us withstand pricing pressures from an oversupplied market, which we expect to persist into 2013, and capitalize on an industry that overall is still growing at a rapid pace,” added Li.
