Trina sees significant Q2 net loss; revises FY shipment guidance

Chairman and CEO of the Chinese photovoltaic module manufacturer, Jifan Gao blamed the challenging market demand on feed-in tariff changes in key solar markets, the U.S.-Sino trade case and U.S. project delays on the back of the 1603 grant program for Trina’s poor Q2 performance.

Most significant was the company’s net loss, which plummeted from US$-29.8 million in Q1 2012, and $11.8 million in Q2 2011, to hit $-92.1 million in Q2 2012. At $346.1 million, net revenues for the quarter also decreased, down from $349.9 million in Q1 2012, and $579.5 million in Q2 2011, and earnings per fully diluted American Depositary Share were negative $1.30, compared to negative $0.42 in Q1 2012.

Q2 2012 gross profit, meanwhile, rose to $29 million, from $20.3 million in Q1 2012, but fell from the $98.3 million recorded in Q2 2011. Having revised its gross margin guidance from around 10%, Q2 saw a gross margin of 8.4%, compared to 5.8% in Q1 2012, and 17% in Q2 2011.

"The sequential increase in gross margin was due primarily to the reduction of ADCVD [anti-dumping and countervailing duty] provisions and inventory brought forward effect, offset in part by an inventory write-down of $26.1 million; the year-on-year decrease in gross margin was due primarily to module average selling price declines in excess of reduced costs," said Trina in a statement released.

Operating expenses totaled $107.6 million in Q2 2012, up significantly from the $60.1 million seen in Q1 2012, and $65.5 million in Q2 2011. As such, an operating loss of $78.6 million was recorded for the quarter, compared to operating loss of $39.9 million in Q1 2012, and an operating income of $32.8 million in Q2 2011. Meanwhile, Q2 2012 operating margin was negative 22.7%, compared to negative 11.4% in Q1 2012, and 5.7% in Q2 2011.

Photovoltaic module shipments reached around 419 MW in Q2, compared to 380 MW in Q1 2012, and 396.4 MW in Q2 2011.

Looking ahead, Trina expects to ship between 450 and 480 MW of modules in Q3 2012. For the FY, the company has revised its guidance down, from an expected 2 to 2.1 GW of shipments, to 1.75 to 1.80 GW. It adds that gross margin should be in the middle-single digits in percentage terms in Q3.

"To address the increased competitiveness of our environment, we have recently restructured our global sales, marketing and project development structure. We anticipate that these changes will streamline the flow of information required in our day-to-day commercial decision-making to better serve the needs of our four global revenue regions and to expand our global customer base," stated Gao.

He added, "Together with our expanding portfolio of innovative, technology-driven products and solutions and increased presence in regional markets, we believe these changes will better position us to secure our long-term position as an industry leader."