JinkoSolar endures rough Q3

22. November 2011 | Industry & Suppliers, Markets & Trends | By:  Becky Stuart

As one of the few solar companies to post positive second quarter (Q2) 2011 financial figures, Q3 must have come as quite a shock for JinkoSolar, which experienced significant declines.

JinkoSolar screenshot

JinkoSolar saw massive Q3 losses. Image: JinkoSolar.

Having already suffered this year, after coming under siege, quite literally, from local residents in Haining, China, following a fluoride leak at its photovoltaic module manufacturing facility, JinkoSolar has now been left reeling from the poor market conditions.

As CEO, Kangping Chen, remarked, "The third quarter of 2011 was clearly a challenging period for both our company and the industry as a whole as the uncertain economic environment throughout Europe pressured demand and the typical seasonal upturn in Germany failed to materialize."

While total revenues in Q2 2011 shot up from the same period in 2010, to reach RMB2.3 billion (US$350.6 million), at RMB1.8 billion, Q3 2011 witnessed a sequential decrease of 21.4 percent. The drop was attributed to the decline in average module selling prices.

Despite this, total Q3 2011 solar product shipments hit 257.7 megawatts (MW), up from 254.1 MW in Q2 2011. Broken down, 23.9 MW of silicon wafers, 15.6 MW of solar cells and 218.2 MW of solar modules were shipped in Q3. The period also saw JinkoSolar expand its in-house annual silicon wafer, solar cell and module production capacity, from around 1.1 gigawatts (GW) each as of June 30, to approximately 1.2 GW each as of September 30.

Q3 2011 gross profit, meanwhile, hit a huge bump, having fallen 88.5 percent from Q2 2011, and 86.3 percent from Q3 2010, to RMB66 million (US$10.4 million). Gross margin also saw declines, from 25.4 percent in Q2 2011, and 33.5 percent in Q3 2010, to just 3.7 percent in Q3 2011. In-house gross margin equally suffered, dropping from 30.5 percent in Q2 2011, and 38.6 percent in Q3 2010, to 18.4 percent.

Having achieved an operational income of RMB409.9 million in Q2 2011, and RMB379.3 million in Q3 2010, Q3 2011 was a big disappointment for JinkoSolar, which saw a significant operating loss of RMB197.3 million. Operating margin was also negatively affected, having fallen from a positive 18.1 percent in Q2 2011, and positive 26.4 percent in Q3 2010, to a negative 11.1 percent in Q3 2011.

In line with this, operating expenses rocketed in Q3 2011 to RMB263.3 million, up 58.1 percent from RMB166.5 million in Q2 2011, and a massive 156.6 percent from RMB102.6 million in Q3 2010.

Furthermore, Q3 2011 net income was a shadow of its former self, which at RMB68.1 million decreased 71.1 percent from RMB235.3 million in Q2 2011, and 73.8 percent from RMB259.5 million in Q3 2010.

Looking ahead, JinkoSolar expects to ship between 180 and 210 MW of solar modules in Q4 2011, and between 770 and 800 MW for the full year. Meanwhile, Q4 total revenues are expected to be in the region of US$180 million to US$210 million (full year: US$1.1 billion to US$1.2 billion). In a statement, it added, "The company reduces its in-house annual silicon wafer, solar cell and solar module production capacity targets from 1.5 GW each to approximately 1.2 GW each by the end of 2011 due to weak market conditions."


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