Strong demand in Japan and UK push JA Solar’s Q1 results above guidance



Major tier-1 PV manufacturer JA Solar beat all key financial guidance metrics in the first quarter of 2014, due primarily to strong PV module demand coming from Japan and the UK.

The company reported total shipments in the first quarter of 638.1MW, well above the top-end of previous guidance of 610MW, a 44% year-over-year increase.

PV module shipments were 388MW and accounted for 61% of total shipments in the first quarter, up from approximately 57% in the first quarter of 2013 and 54% in the fourth quarter of 2013.

The transition to a major PV module supplier having been solidified as solar cell and tolling amounted to 250.1MW.

On a regional basis module shipments to Japan accounted for 32% of the volume while China accounted for 26% (mainly solar cells). The other key module market was the UK, driven by continued success in supplying utility-scale projects in the country. The UK accounted for more than half of shipments in Europe, which accounted for around 15% of volume in the quarter.

Both Japan and UK have been booming markets, peaking in the first quarter on slight incentive changes imposed for both countries financial year ends.

Financial results

JA Solar reported first quarter revenue of US$366.0 million, an increase of 5.2% from the prior quarter and an increase of 35.7% from the first quarter of 2013.

Gross margin was 16.7%, compared with 15.5% in the prior quarter supported by stable ASPs in key markets. JA Solar reported an operating profit of US$25.9 million, an increase of 173.2% from an operating profit of US$9.5 million in the previous quarter. The company created a positive operating cash flow of US$31.9 million in the quarter.

Management said that it expected a return to full-year profitability in 2014.

Production update

Aside from its plans to assemble PV modules in South Africa in a joint venture with downstream module mounting systems specialist, Powerway, JA Solar is increasing module capacity from 1.8GW to 2.8GW, which the company said was on-track go online by the end of the second quarter.

The company is also increasing solar cell capacity from 2.5GW to 2.8GW to better match module capacity levels, which will also be completed by the end of the second quarter. Management noted that the CapEx requirements for the cell capacity increase were only US$13 million.


JA Solar expects total cell and module shipments to be between 670MW and 700MW in the second quarter, while reiterating full-year cell and module shipment guidance of between 2.7GW and 2.9GW, despite the better than expected shipments in the first quarter.

Management noted in the earning call that its expected China to account for around 30% of shipments in the second quarter, 35% in Asia Pacific including Japan, 15% in Europe and 12% in Americas with 8% of shipments for the rest of the world.

The China market had softened in the first quarter but management noted that strong demand was already anticipated to kick-in at the end of May and continue through the rest of year and PV projects build momentum to meet government targets of 14GW for the year.  JA Solar reiterated plans for its downstream project business to be around 200MW in 2014.

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