Yingli Green lowers 2014 shipment guidance on weaker China, US demand

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The PV industry’s largest manufacturer, Yingli Green Energy revised down full-year module shipment guidance due to weaker than expected demand in China and US as it cut third-party cell and module purchasing to keep in-house production at high utilisation rates.

The company reported second quarter 2014 module shipments of 887.9MW, up 40.8% from 630.8MW in the first quarter. Module shipments included 71.8MW for its own downstream PV power plants business in China.

Total net revenues were US$549.5 million, up from US$432.2 million in the previous quarter but remained below the US$613.0 million generated in the fourth quarter of 2013.

More losses

Yingli Green continued its loss making ways with a negative operating margin of 2.5%, compared to negative 4.8% in the first quarter, while the operating loss was US$13.9 million.

Net loss was US$46.0 million in the second quarter of 2014, compared to a US$55 million net loss in the previous quarter.

Slightly lower ASPs resulted in a gross margin of 15.6%, compared to 15.7% in the first quarter of 2014 and up from 11.8% in the second quarter of 2013.

Gross margin for sales of PV modules was 16.2% in the second quarter of 2014, compared to 16.8% in the prior quarter and 12.5% in the second quarter of 2013.

The company had US$158.2 million in cash and cash equivalents at the end of the quarter, the lowest level since 2008.

Geographical sales and shipments

Module sales to its second biggest market after China increased only 6% from the first quarter, while first-half year sales were 16% higher in 2014 than the same period a year ago.

However, module shipments percentile to the US declined from 24% (151MW) of total shipments in the first quarter to 18% (159MW) in the second quarter.

Yingli Green guided a further decline to 10% of shipments to the US in the third quarter, suggesting shipments between 90MW and 100MW only. The US is expected to account for only 15% of total shipments for the full-year.

PV project pipeline

Yingli Green reiterated downstream PV power plant business would install between 400MW to 600MW in 2014. Its total China pipeline was said to have topped 1.4GW.
The company noted that over 60% of projects being built this year have secured buyers.

Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy said, “In the first half of this year, we are developing in the aggregate 155 MW of downstream projects, some of these projects under construction are expected to be further developed together with our business partners such as China National Nuclear Corporation, Shanghai Sailing Capital Investment Fund and Datong Coal Mine Group Co., Ltd. In the third quarter, we expect to start construction of a total of 168 MW of downstream projects across China.”

Manufacturing update

As shipment data shows, softer demand than expected in China and the apparent impact on demand after US anti-dumping duties were announced means the company would heavily curtail the use of over 1GW of third-party cell and module suppliers, while keeping in-house production highly utilised.

Yingli Green management said in its earnings call that third-party production pricing in the second-half of the year was higher, which would have further squeezed module margins.

Lower guidance and market leadership

Weaker demand led to the company revising down its PV module shipment target to 3.6GW to 3.8GW for the full-year, down from previous guidance of 4GW to 4.2GW.

Third quarter shipment guidance was given at between 900MW to 1GW.

As PV Tech reported earlier today on the back of shipment guidance given by Trina Solar, Yingli Green’s closest rival, both companies are guiding shipments for the full-year that are identical.

However, Trina Solar’s second-half shipment guidance and PV project business targets could result in a new market leader.

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