ReneSola records shaky second quarter

The Chinese photovoltaic module manufacturer, which revised its second quarter guidance downwards at the start of July, had a shaky quarter brought on by the current weak market conditions, and its transition to Virtus wafer production.

In terms of solar shipments, the manufacturer showed a 14.4 percent year-on-year increase from 258.3 megawatts (MW) in the second quarter of 2010 to 295.5 MW in 2011. This figure represented a sequential decrease of 10.6 percent however, from 330.4 MW.

Broken down, wafer shipments were 230.5 MW in the second quarter of 2011, up 11.5 percent from the same period last year, but down 5.3 percent from the previous quarter.

Photovoltaic module shipments, on the other hand, increased 28.5 percent from 2010 to reach 65 MW, but decreased by 25.2 percent from 86.9 MW in the first quarter of this year.

ReneSola’s operating income took the biggest hit, declining in the second quarter of 2011 by 56.2 percent from 2010 and 69.6 percent sequentially to hit USD$23 million. Operating expenses, however, also declined, by 5.2 percent year-on-year and 10.5 percent quarter-on-quarter. Meanwhile, operating margin took a massive tumble, from 20.7 percent and 21 percent from the second quarter of 2010 and the first quarter of 2011 respectively to 9.2 percent.

Sequentially, net revenues were also hit hard, having fallen 30.6 percent from the first quarter of 2011 to USD$249.3 million in the second quarter. This figure represented just a 1.8 percent decrease on the same period last year, however.

Gross profit didn’t fare any better, falling 40.1 percent from the second quarter of 2010 and 54.6 percent sequentially to hit USD$45.9 million in the second quarter of 2011. Gross margin, meanwhile, decreased form 30.2 percent in 2010 and 28.2 percent in the first quarter to 18.4 percent.

Commenting, Xianshou Li, ReneSola’s chief executive officer said, "Both wafer and module prices fell faster than expected in the second quarter as European subsidy cuts weakened demand and led to oversupply in the industry.

"Although this affected both our top and bottom lines, we were able to maintain a gross margin of 18.4 percent with our industry-low wafer processing costs and growing in-house polysilicon production."

He added: "As the solar market matures, we will continue to focus on wafer production to capitalize on our brand name, scale of operations and innovative technologies to lead the industry in cost-competitive solar manufacturing."

He went on to say that by the end of the year, ReneSola expects to replace all its multicrystalline wafers with Virtus wafers.

Looking ahead, the manufacturer expects to ship between 330 and 250 MW of wafers and modules in the third quarter of the year. Additionally, it aims to reap revenues of USD$220 million and $240 million, while gross profit margin is expected to be in the rage of six to eight percent.

In terms of the whole year, it has withdrawn its guidance as it expects market conditions to remain "challenging".