Trina’s Q1 financials affected by US-China trade case

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As announced last Thursday, May 17, Trina Solar received preliminary dumping margins of 31.14 percent in the ongoing U.S.-China solar cell trade case. It additionally received preliminary countervailing tariffs of 4.73 percent on March 21. While a final decision is still to be reached – expected on or before November 19, and July 19, respectively – the Chinese photovoltaic module manufacturer has had to make provisions for the potential duties.

Missing its module shipment guidance of between 400 to 430 megawatts (MW), Trina Solar shipped just 380 MW in Q1 2012, compared to 424.9 MW in Q4 2011, and 320.4 MW in Q1 2011. Remaining optimistic, the company believes it will up this going forward, to between 500 to 520 MW in Q2 2012, and two to 2.1 gigawatts in FY 2012.

Q1 2012 net revenues decreased by 19.7 percent in Q4 2011, from $435.7 million and down 36.5 percent year-on-year, to hit $349.9 million. Gross profit, meanwhile, was down from $31 million in Q4 2011, and $151.3 million in Q1 2011, to hit $20.3 million. Excluding the provisions, gross profit would have been $46.5 million.

"Gross profit during the first quarter of 2012 includes provisions of $6.9 million and $19.3 million for potential countervailing and anti-dumping duties, respectively, relating to the import of solar modules into the United States during the first quarter," explained Trina in a statement released.

Q1 2012 gross margin was 5.8 percent, thus again missing the guidance of low teens in percentage terms, compared to 7.1 percent in Q4 2011, and 27.5 percent in Q1 2011. Excluding the provisions, it would have been 13.3 percent.

On a more positive note, Q1 2012 loss from operations was sequentially better at $39.9 million, compared to $62.9 million in Q4 2011. It paled in significance in comparison to Q1 2011, however, which reaped an income of $84.5 million. Operating margin was negative 11.4 percent in Q1 2012, compared to negative 14.4 percent in Q4 2011 and positive 15.3 percent in Q1 2011. Net loss also improved sequentially, from $65.8 million in Q4 2011, to $29.8 million.

Looking ahead, Trina Solar expects to up its shipping volume in Q2 and FY 2012, as aforementioned. It further predicts an overall Q2 gross margin of around 10 percent, taking into account the expected tariffs, and the outsourcing of its wafer and cell requirements.

Jifan Gao, chairman and CEO commented, "Lower system costs continue to drive market opportunities throughout the Americas and our market development efforts have expanded in South America, the Caribbean Islands and in Canada, where we have established a legal operating entity in Ontario. Meanwhile, in Africa and the Middle East, we are working with a growing number of local developers and utilities to supply power purchase agreement-driven projects, which are increasingly independent of traditional feed-intariffs."