Yingli ups shipping record, but posts falling gross margin


At the end of the second quarter (Q2) of 2011, Yingli had bucked the trend to post both high shipping volumes and revenues, thus leading it to reiterate its shipping guidance and ramp up capacity. However, suffering from the lack of demand pickup, which many had expected in Q3 2011, the company was forced to revise its Q3 guidance downwards at the start of the month.

In announcing its actual Q3 figures, the company has managed to up its module shipments by 21.9 percent. It declined to provide any concrete figures, in megawatt terms, however.

At RMB 4,258.6 million (US$667.7 million), total net revenues, while representing an increase on Q3 2010 (RMB 3,284.2 million), fell short sequentially (RMB 4,398.8 million). "The slight decrease in total net revenues quarter over quarter was due to the decline of average selling price, partially offset by increased PV module shipment that was attributable to diversified customer portfolio geographically," explained Yingli in a statement.

Gross profit was hard hit, having fallen from RMB 970.1 million in Q2 2011, and RMB 1,094.5 million in Q3 2010, to reach RMB 458.5 million. Overall gross margin, meanwhile, was 10.8 percent in Q3 2011, compared to 22.1 percent in Q2 2011, and 33.3 percent in Q3 2010.

Operating expenses also increased, from RMB 443.7 million in Q2 2011, and RMB 358.7 million in Q3 2010, to hit RMB 464.1 million. "The slight increase in operating expenses quarter over quarter was due to a non-cash bad debt expense of RMB 41.9 million (US$6.6 million), partially offset by the better control of sales and marketing related expenses," said Yingli. The non-cash bad debt expense is said to be related to the failure of an unnamed company, which has filed for bankruptcy, to pay up.

Consequently, Yingli recorded an operating loss of RMB 5.5 million in Q3 2011, compared to an operating income of RMB 526.4 million in Q2 2011, and RMB 735.8 million in Q3 2010. The operating margin was also poor, at negative 0.1 percent, compared to 12 percent in in Q2 and 22.4 percent in Q3 2010.

Furthermore, at RMB 180.5 million, Q3 2011 net loss was massive when compared with the net income of RMB 375.6 million in Q2 2011, and RMB 456.1 million in Q3 2010.

As previously announced, Yingli has revised its full year shipment guidance downwards, from between 1.7 to 1.75 gigawatts (GW), to between 1.58 and 1.63 GW.