Chinese manufacturer ReneSola‘s decision to use more of its wafers in-house to make modules may have seen a significant hit to its first-quarter revenues but also appears a textbook example of a company nimbly adpating to a changing market.
Traditionally an original equipment manufacturer (OEM) meaning the lion's share of its products are made for other companies to slap their brand on before coming to market ReneSola has decided the time has come to strengthen its brand with the end-consumer.
The Zhejiang-based manufacturer, careful to stress its multinational credentials online, blamed a near-$24 million quarter-on-quarter fall in revenue on its decision to use wafers to make ReneSola modules rather than ship them to other manufacturers.
Shareholders alarmed at the resulting January-to-March operating loss of $8.7 million compared to an $8.8 million profit for the October-to-December period, should note CEO Xianshou Li's observation the company is switching focus from utility scale projects to commercial and residential rooftop sales direct to the consumer.
In an announcement of the company's first-quarter figures yesterday, Li said the smaller-scale market offered ‘stronger and more sustainable growth' as well as higher module sale prices and the opportunity to market the ReneSola brand. Li predicted retail sales will account for almost half the company's module shipments by the end of the year.
The change in strategy has come with a cost though, net cash outflow from operations rising from $30.8 million to $112.3 million quarter-on-quarter to pay off accounts payable, according to the company as ReneSola burned through $134 million in three months to leave it with cash and cash equivalents of $214.9 million at the end of March.
Poly production almost stopped
In another ‘one step back to take two steps forward' the company modernized its polysilicon factory in Sichuan, a move which saw poly production fall from 1,768 metric tons in the final three months of 2013 to just 175 metric tons to the end of March.
ReneSola says the Sichuan plant is back to fully operational mode, and just in time for a predicted explosion in global demand, according to market research company IHS although the majority of installations will come from large-scale projects, say the analysts.
Also reflecting the global picture, Q1 module shipments increased to Japan and new boom market the UK at the expense of ReneSola's domestic market and the U.S. and other parts of the world.
ReneSola is predicting second-quarter module shipments will dip from the 521.1 MW seen in the first three months of the year to 480-500 MW for April-to-June and repeated its full year 2014 forecast of 2.3-2.5 GW.
The update made brief mention of the uncertainty created by ‘trade frictions' in the U.S. and, potentially, India and Australia but, with the company reducing its short-term borrowings and debt, the outlook appears bright for ReneSola.
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