Yingli Green dips into the red on record quarterly module shipments

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Updated: Tier-1 module manufacturer, Yingli Green Energy reported strong third quarter results despite market conditions. The PV module manufacturer achieved record quarterly shipments, up 21.9% from the previous quarter to an estimated 500MW. However, due to falling prices, revenue declined to US$667.7 million, compared to a record US$680.6 million in the second quarter of 2011.

Yingli Green reported a net loss for the third quarter of US$28.3 million on declining margins and inventory write downs of US$40.6 million, due to falling prices and industry overcapacity with weaker than expected demand in the second-half of the year. Yingli Green’s results were in line with recently revised guidance.

Overall gross margin was 10.8% in the third quarter of 2011, compared to overall gross margin of 22.1% in the second quarter of 2011 and 33.3% in the third quarter of 2010. Price declines and inventory provisions were primary causes for the decline.

Yingli Green reported a non-cash bad debt expense in the quarter as an unidentified customer filed for bankruptcy. The company also reported an operating loss of US$0.9 million in the third quarter.

The operating margin was negative 0.1% in the third quarter of 2011, compared to operating margin of 12.0% in the second quarter of 2011 and 22.4% in the third quarter of 2010.

“I'm pleased to see that we emerged stronger under the challenging market dynamics in the third quarter,” commented Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. “With a 21.9% increase in PV module shipments in this quarter, we marked another record of quarterly shipment volumes. This was attributable to our well-recognized brand, diversified customer portfolio, strong product bankability, outstanding after-sales services, leading cost structure and cutting-edge technology.”

Yingli Green highlighted that module shipments within China during the third quarter alone had exceeded its cumulative shipments as of June 30, 2011. The company also highlighted efforts to diversify geographically, noting Latin America as a new market for the company. China should be a 3GW market  in 2012, according to management in the conference call. 

The company reiterated previously revised shipment guidance for the full-year. Yingli expects PV module shipments to be in the range of 1,580MW to 1,630MW, down from previous guidance of between 1,700MW to 1,750MW. Despite market weakness shipment levels would have increased between 48.8%-53.5% compared to fiscal year 2010.

Manufacturing update
Yingli said in the conference call to discuss third quarter results that it had achieved significant non-silicon manufacturing cost reductions since the previous quarter. Management noted that in-house blended non-silicon costs had reached US$0.66 per watt in Q3, down from US$0.72 per watt in the prior quarter and relatively flat for the last 4-quarters. 
Overall material costs had been reduced 30% in the quarter, while polysilicon costs had reduced by 40%. 
Yingli Green reported average cell efficiency reached 18.9% on ‘PANDA’ commercial lines in Q3 and are expected to reach 19.0% by the end of 2011 through further optimization of its manufacturing processes.
Update 2
Yingli Green management said that it expected fourth quarter shipments to be down around 20% from the third quarter with China responsible for approximately 25% of shipments and Europe making-up approximately 60% of shipments. 
Management noted that it expected around the same split on shipments on a geographical basis in 2012, with an increased percentage of shipments to the US market. 

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