ReneSola lowers full-year module guidance after missing Q3 quota

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Major tier-one PV manufacturer, ReneSola has reported lower than expected third quarter results and guided full-year module shipments to be down by at least 540MW compared to previous projections.

ReneSola reported total PV module shipments 462.2MW in the third quarter, compared to 498.7MW in the previous quarter. The lower shipments were said to be due a delay in shipments caused by new lower minimum imported prices in Europe, which were only announced towards the end of the quarter. Delayed shipments would carry over into both the fourth quarter of 2014 and the first quarter of 2015.

Total solar wafer and module shipments were 663.8MW, compared to 698.3MW in the previous quarter. The decrease in wafer shipments year over year reflects the company's strategic decision to continue to use the majority of its wafer for internal module production.

ReneSola reported third quarter net revenue of US$372.5 million, compared to US$387.1 million in the previous quarter. 

Gross profit was US$57.1 million with a gross margin of 15.3%, compared to a gross profit of US$56.9 million with a gross margin of 14.7% in the previous quarter.

Operating income was US$8.5 million in the quarter with an operating margin of 2.3%, compared to an operating income of US$10.6 million with an operating margin of 2.7% in the second quarter of 2014. 

Net loss attributable to holders of ordinary shares was US$11.7 million, which was said to be primarily due to the depreciation of European currencies that led to a foreign exchange loss of US$13.7 million in the quarter. 

Xianshou Li, ReneSola's chief executive officer said: “Our platform gives us the flexibility to adjust to changes in demand across all of our major markets while maintaining operating efficiency and, as in the case of the third quarter, improving our gross margin to 15.3%. Moreover, we continue to move away from low-margin markets and to direct more of our resources toward higher-margin commercial and residential projects and total-solution opportunities. 

“While we remain focused on our retail and residential-oriented business development, we selectively pursue downstream project opportunities with high quality and low risk in developed countries such as the United Kingdom. As of November 2014, we have started construction on a second downstream project in the UK and are also in the process of conducting due diligence on other quality projects there, which we expect to sell and generate revenue from in the coming quarters,” added Li.

Daniel K. Lee, ReneSola's chief financial officer, said: “While we focus on expanding our commercial, retail and downstream initiatives, we continue to follow a prudent financial approach and asset-light strategy in order to grow our margins while improving our cash flow. Our Q3 gross margin of 15.3% represents two straight quarters of margin improvement. Furthermore, our cash flow from operations improved from an outflow of US$40.6 million in 2Q14 to an outflow of US$10.7 million, of which almost US$10 million was payment used for our downstream projects in the UK.”

Revised guidance 

ReneSola guided fourth quarter PV module shipments to be in the range of 460MW to 480MW and gross margin of approximately 13%.

Based on PV module shipments in the first nine months of 2014, ReneSola is guiding full year module shipments of 1.94GW to 1.96GW, down from previous projections of 2.3GW to 2.5GW. 

ReneSola follows other China-based manufacturers in revising down full-year shipments in releasing third quarter financial results, which include Hanwha SolarOne, Trina Solar and Yingli Green Energy.

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