Yingli Green slashes full-year shipment guidance on plummeting demand

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Updated: Major tier-one PV manufacturer Yingli Green Energy reported an increase in losses for the second quarter of 2015, driven by plummeting margins and revenue decline as PV module shipments fall. The company slashed full-year shipment guidance by more than 1GW.

Yingli Green reported second quarter revenue of US$438.1 million, down from US$468.7 million in the previous quarter. 

Total module shipments in the quarter were 727.9 MW, down from 754.2MW in the first quarter of 2015. 

Liansheng Miao, chairman and CEO of Yingli Green Energy said: “During the second quarter of 2015, our shipments to China and the U.S. grew significantly and increased by 110% and 35%, respectively, compared to the first quarter of 2015.”

However, the company reported a gross profit US$27.6 million, representing a gross margin of 6.3%. The gross margin on sales of PV modules was 7.9%. This compares with a gross profit of US$66.3 million in the previous quarter, representing a gross margin of 14.1%. The gross margin on sales of PV modules was 14.8% in the first quarter of 2015.

Yingli Green reported an operating loss of US$28.8million, representing a negative operating margin of 6.6%, compared to an operating loss of US$10.7 million in the first quarter of 2015, representing a negative operating margin of 2.3%. 

Net loss was US$96.5 million in the second quarter of 2015, compared to a net loss of US$58.6 million in the previous quarter. 

“We successfully repaid the RMB1.2 billion three-year unsecured medium-term notes due in May 2015, and we are actively taking measures to prepare for repayment of the RMB1.0 billion five-year unsecured medium-term notes when they become due this October and are exploring a number of financing options including liquidation of idle assets, introduction of strategic investors and potential new cooperation model with our business partners. Also, for our downstream project development business, we have adopted and will follow a core principle of 'less investment and quicker turnover' in order to maintain a stable cash flow. We believe these measures will help us to enhance our cash position, and allow us to gradually improve our balance sheet,” added Miao. 

However, revenue is expected to continue to decline as the company guided PV module shipments to be in the range of 550MW to 580MW in the third quarter. 

As a result Yingli Green has significantly lowered shipment guidance for the full-year from initially guiding shipments to be in the range of 3.6GW to 3.9GW it said it expected shipments to only reach 2.5GW to 2.8GW, over 1GW lower than previously stated at the beginning of the year.

The plummeting demand is primarily due to its financial condition and issues raised in its 2014 Annual Report over its ability to remain a going concern. 

Based on the revised shipments for the year, production utilisation rates would be around 63%, compared to all its major rivals running effectively at 100% utilisation rates in 2015.

However, nothing would seem to be that simple. Management noted in an earnings call with financial analysts that it was working with an unspecified number of other Chinese PV manufacturers to provide tolling (OEM) module services to keep production utilisation rates as high as 90% through the second half of the year.

According to RBC Capital Markets financial analyst, Mahesh Sanganeria in a research note to clients, Yingli Green’s module ASPs were down nearly 5% to US$0.57/W. 

Sanganeria said in the investor note: “While we were anticipating a cut to annual shipment guidance, the magnitude is larger than our expectation.”

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