Higher module shipments on the back of increasing focus on expanding its solar module business and building sales channels supported ReneSola producing better than expected second-quarter 2012 financial results. The company posted US$233 million in sales, up 10.2% from US$211.5 million in the prior quarter.
Total solar product shipments were a record 503.7MW, an increase of 8.1% from 466MW in the first quarter of 2012. Module shipments rose over 75% quarter over quarter to 159.7MW. However, wafer shipments decreased 8.3% as the company used in-house wafer production for module production.
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Despite the improvements, ReneSola was impacted by falling ASPs and polysilicon inventory write downs, generating a net loss of US$34.8 million, compared to a loss of US$37.8 million in the first quarter of 2012. Gross profit for the second quarter was US$1.3 million compared to a gross loss of US$80 million in the previous quarter.
“Despite what remained a challenging macro-environment, with lower average selling prices and lingering uncertainty surrounding the solar market, we continued to execute on our overarching strategy in the second quarter of 2012 to grow our module business, lower costs and develop superior technology,” said Xianshou Li, ReneSola's chief executive officer.
Gen II ‘Virtus’ technology
In a conference call to discuss second quarter results, Li revealed for the first time efforts to develop a second-generation ‘Virtus’ wafer and cell processing technology that would be used for its expanding module business. To support further module sales in the future, Li also highlighted the company had developed in-house a micro-inverter, dubbed ‘Replus,’ that would be launched later with its expanding module product offering.
“R&D remained the central focus in the second quarter,” noted Li in the conference call, which was translated from Chinese. “During the quarter, we made progress in the development of our Virtus wafer and modules. We developed a second generation of our Virtus wafer, which uses our newly developed and proprietary in-house manufacturing process, the Virtus A++ process which reduces wafers without the use of monocrystalline seeds. This new manufacturing process results in lower light induced degradation and lower processing costs, which in turn results in a production of more distributed ingots with a greater percentage of high efficiency products,” noted Li.
The CEO said that the Virtus A++ processing cost was close to US$0.12/W, far lower than its overall processing cost of US$0.17/W, though processing details were not disclosed.
However, he said that management were confident that costs would decrease further to around US$0.11/W by the end of the year, partly due to expected cell efficiency improvements.
At present, ReneSola said that the Virtus A++ process produces wafers with average cell efficiency of 17.5% and that its next-gen Virtus II modules would have 250 watts to 260 watts of power based on a 60 cells layout. A 72 cell layout was being planned that would potentially generate as much as 300-310 watts of power.
However, modules based on its Virtus A++ wafers using the Virtus A++ manufacturing process were said to make up perhaps only small percentage of production in the third and fourth quarters of 2012.
Production update
ReneSola also reported that its in-house polysilicon production capacity expansion remained on schedule and that it continued to lower production costs. The company said that production had increased to approximately 1,119MW, up from 900MT in the first quarter.
Production costs were said to have been reduced significantly from US$33/kg in the first quarter of 2012 to US$25.8/kg at the end of the second quarter, though upgrades and maintenance on the power grid to its poly-plant in the previous quarter had impacted production and therefore costs.
Production costs were expected to decrease to approximately US$24/kg by the end of the third quarter and reach US$22/kg by year-end, which was lower than previously guided but still higher than spot market prices.
However, after its Phase II polysilicon plant expansion is completed, which would boost polysilicon production to 10,000MT annually, Phase II polysilicon production costs were expected to be around US$18/kg, lowering its blended average costs near to larger rivals production cost levels.
ReneSola reported wafer processing costs had decreased to US$0.17/W, down from US$0.19/W in the first quarter of 2012. Further cost reductions to US$0.15/W were expected in the third quarter through additional improvements in manufacturing processes, according to the company.
In contrast to many of its peers, ReneSola said that it had hired an additional 400 workers intended to support the ramp of its module capacity to 1.2GW. Management said that its module processing cost had declined 10% compared to the prior quarter, though didn’t provide details.
Management said that it would spend US$59 million in the third quarter to support the polysilicon production capacity expansions as well as to improve manufacturing processes.
Outlook
Continuing its momentum into the third quarter, ReneSola expects total shipments to be in the range of 510MW-530MW, with module shipments in the range of 150MW-170MW.
Revenues are expected to be in the range of US$200 million to US$220 million, while the company reiterated previous shipment guidance of 2.2GW-2.4GW for the full-year. Module shipments for the full-year were expected to be in the region of 600MW.