ReneSola guides higher ASPs as EU anti-dumping duties bite

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The planned outsourcing of module production within Europe to avoid expected EU anti-dumping duties is expected to contribute to higher average selling prices for ReneSola during the rest of the year.

Discussing first quarter 2013 results, ReneSola management noted that previous plans to meet European customer demand in the region of 400MW were ongoing but ASPs would be significantly higher than before. To meet European customer demand, outsourcing production would include sourcing solar cells outside of China and possibly bare wafers as well to avoid EU duties.

Management said in the call that module ASPs in the first quarter declined to around US$0.61/W but would increase to around US$0.70/W in Europe in the second half of the year. The company expects Europe to account for around 50% of revenue in 2013.

Overall, ASPs are expected to stabilise in the second quarter of the year and end the year up to between US$0.65/W to US$0.70/W. Module production cost reductions however would be minimal in 2013, declining one cent to around US$54/W.

ReneSola management noted in the call that polysilicon production upgrades were completed and said it expected production to reach around 10,000MT this year with a production cost of US$15/kg.

First quarter results

ReneSola reported first quarter 2013 revenue of US$284 million, which exceeded guidance for the quarter on the back of higher than expected PV module shipments of 327MW. Total wafer and module shipments were 662MW.

The sequential decrease in solar product shipments was said to be mainly due to a higher percentage of wafers being allocated to in-house module production.

However, the company reported a gross loss of US$5.6 million with a gross margin of negative 2.0%, compared to a gross profit of US$10.3 million with a gross margin of 3.3% in the fourth quarter of 2012.

The company said that the decrease in gross profit was due to ASP declines and the decrease in wafer shipments, as well as the temporary halt in production at the Sichuan polysilicon plant to upgrade its facilities and equipment.

As expected, ReneSola guided increasing sales and shipments beginning in the second quarter. Total solar wafer and module shipments are expected to be in the range of 700MW to 720MW, with solar module shipments expected to be in the range of 400 MW to 420MW.

Revenue is expected to be in the range of US$310 million to US$330 million and gross margin is expected to be in the range of 3% to 5%. Operating cash flow is expected to exceed US$40 million.

Management also noted in the call that shipment run rates in the second half of the year would average over 700MW per quarter to meet previously given shipment guidance that was also reiterated in the call at between 2.7GW to 2.9GW.

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