Trina Solar shipment and margin guidance cut for Q3

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The anticipated pick-up in demand elasticity proved elusive for what is expected to be a common theme of the next few weeks as major PV manufacturers report third quarter results. Another short-term trend will be guidance revisions along the lines announced by Trina Solar, which has cut shipment guidance by approximately 100MW and margins reductions by a few percentage points.

Trina Solar said module shipments in the third quarter would be in the range of 372MW to 375MW, compared with previous guidance of 480MW to 520MW.

The company guided that gross margin would be in the range of 10% to 11%, compared to previous guidance of mid to high teens in percentage terms.

Gross margin declines include an inventory write down of approximately US$19 million, potentially reflecting the rapid price declines and another expected trend in the quarter.

Overcapacity and weak demand in key markets should see many PV manufacturers announce production cutbacks and lower utilization rates to reduce inventory of overall overcapacity.

“A deflationary pricing environment impacted by challenging financing conditions for some of our customer's European projects resulted in the shortfall of our targeted shipment volumes,” noted Jifan Gao, Chairman and CEO of Trina Solar. “At the same time, we strived to maintain reasonable gross profits amidst such market conditions.”

“Despite continued challenges in our traditional markets, we believe our efforts to capture or expand business in new and existing customer channels will result in significant orders for the year 2012. Specifically, we are encouraged by the prospects of demand growth in emerging PV markets within the Americas, Asia and Africa. Additionally, we have improved, and will continue to improve, our leading manufacturing efficiencies and cost structure through, among other things, renegotiations of some of our polysilicon and other key materials agreements to position us favorably going forward.”

Trina Solar Based has also revised its outlook for the full year 2011, noting that PV module shipments to be approximately 1.4 GW, compared to previous guidance of between 1.75GW to 1.8GW.

The PV module manufacturer had previously revised down guidance for the second quarter.

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