ReneSola refuses orders from India and China citing low profitability

Chinese module manufacturer ReneSola has turned down offers from China and India citing low profitability, it has emerged.

In its Q2 2014 results conference call yesterday, CEO Xianshou Li said the company was not interested in simply shipping as many modules as possible.

Speaking through IR director Laura Chen, Li said: “We don't really now focus too much on the quantity, the total shipments for a full year. Rather, we would focus on the profitability.

“We have refused to take some orders with very low ASP and low profitability; for example, the orders from China and India. We focus more on the high ASP markets. So, all in all, we just focus on the profitability rather than the quantity.

The company’s geographic spread of business in the second quarter was 40% in Europe, 20-25% in Japan, with China the US and the rest of the world weighing in with 10-15% each.

The tactic highlights one problem with India’s reverse auctions for solar projects, which can put a strain on developer’s to secure supply. Analyst firm Mercom has warned of them creating “a race to the bottom“.

The company said it was assessing its OEM and cell manufacturing capabilities to adjust for the new trade duties. It also revealed plans to increase its monthly output for the US market to 40MW from just under 25MW.  

“For the US market we have about, as Mr. Li mentioned before, about 23MW per month. They are our products. They are 100% US compliant, which means they are 100% non-Chinese and non-Taiwanese cells,” said Daniel Lee, CFO, ReneSola.

“We've been looking at different parts of the world, looking to expand this cell capacity, but in the meantime really this US policy of anti-dumping has really affected the Taiwanese cells. The price of Taiwanese cells has really been dropping precipitously,” he added.

Lee also said the company had been building up inventory in Europe as it anticipated an increase in demand through the rest of 2014.

This article uses excerpts from Seeking Alpha's transcript.