Trina Solar’s module shipments increase in Q4 but revenue and margins down

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Stronger than anticipated demand in the fourth quarter of 2011 helped Trina Solar exceed PV module shipment guidance, but revenue and gross margins declined compared to the previous quarter. The company posted a 4Q'11 loss from operations of US$62.9 million, compared to an operating loss of US$23.5 million in the third quarter of 2011.

The company reported that net revenues in the fourth quarter reached US$435.7 million, a decrease of 9.6% sequentially and 32.1% year-over-year. Total shipments were 424.9 MW, exceeding previous guidance of between 320MW to 350MW, compared to 370.1MW in the third quarter of 2011 and 350.8MW in the fourth quarter of 2010.

Trina Solar also reported full-year PV module shipments had reached approximately 1.51GW, compared to previous guidance of 1.4GW, up 43.1% from 2010. Total net revenues in 2011 reached US$2.05 billion, an increase of 10.2% on 2010.

Gross margin was 16.2% compared to 31.5% in 2010, while gross profit also declined to US$332.6 million, a decrease of 43.1% from 2010. Operating income also fell dramatically to just US$31.0 million, compared to US$417.3 million in 2010. Trina Solar posted a net loss for the year of US$37.8 million, a decrease of 112.1% from 2010.

The company said that the decline in gross margin was primarily due to greater decreases in ASPs, offsetting the effects of both lower polysilicon purchase prices and non-silicon manufacturing cost per watt reductions the company had undertaken in 2011.

“We achieved notable sequential shipment growth in the fourth quarter as we expanded sales in our existing major and newer emerging markets. Despite this achievement, growth in worldwide module capacity and peaked channel inventory resulted in significantly lower product prices which adversely affected our bottom line results, whereby our cost reduction was not sufficient to offset lower ASPs,” commented Jifan Gao, chairman and CEO of Trina Solar. “Most notably, as a result of our diversified sales by region, revenue outside Europe exceeded fifty-percent of global sales for the first time in our history.”


Production costs
Trina Solar said that non-silicon manufacturing cost for its core raw materials to module production had declined faster than previously guided. Non-silicon costs reached approximately US$0.64 per watt, compared to its previously announced target of US$0.70 per watt by the end of 2011.
The faster than expected gain was said to be down to and higher cell conversion efficiencies, as well as reduced supply chain costs created by increased on-site recycling of consumable and non-consumable materials.
The company is targeting non-silicon manufacturing cost of below US$0.60 per watt by the end of 2012. 
Technology migration 
Cost reductions are interlinked with migrating to higher cell efficiencies. Trina Solar said that in 2012 it would be focusing on further cost reductions that include proprietary processes for ingot, wafer, cell and module manufacturing, designed yo provide higher cell conversion efficiencies. 
Central to this effort is the ramp of its ‘Honey’ cell technology which will ramp significantly by the second quarter of the year, and ahead of schedule, according to Terry Wang, Trina Solar’s CFO in a conference call to discuss results. 
Trina expects to increase its in-house PV cell and module production capacity by up to 500MW, to a total of approximately 2.4GW by the end of the first half of 2012.
Though not expected to be commercialized in 2012, Trina Solar said that its monocrystalline cell technology development with the Solar Energy Research Institute of Singapore (SERIS) was targeting a milestone cell efficiency of 20% by the middle of 2012 and cell efficiency of 21.5% in 2013, based on a test production line basis. 
A monocrystalline N-type SPARC solar cell that employs back-side contact technology was also being developed. 
In the call, management said it would be launching a 300W high-efficiency module for the utility market this year. 
Management noted that it had 300MW of Honey cell technology capacity already in place, having started commercial production in January, 2012.
Capital spending is to be pegged at US$200 million, which management said US$150 million would be allocated to expanding capacity of its Honey cell technology to the targeted 500MW nameplate capacity. This would suggest US$50 million is being allocated primarily to equipment maintenance. 

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