Trina continues to see net losses

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Like most of the photovoltaic industry, Trina Solar had a rough ride in 2012, due to continued oversupply, ever falling prices and continuing trade disputes. While it remains to be seen if Europe will impose tariffs on imports of Chinese photovoltaic modules, it appears that Trina Solar is not quite as close to bankruptcy as analyst Richard Pearson claimed in January, or in such dire financial straits as many of its domestic peers.

Saying that, the Chinese photovoltaic module manufacturer suffered heavy losses both in Q4 and for the FY 2012. Indeed, its last quarter’s net loss hit US$87.2 million, compared to a loss of $57.5 million in Q3, and $65.8 million in Q4 2011. For the FY, then, profitability fell significantly from $37.8 in 2011, to negative $266.6 million.

Losses per fully diluted American Depositary Share (ADS) meanwhile, reached $1.23 in Q4, compared to $0.81 in Q3, and $3.77 for the FY 2012, compared to $0.54 in 2011.

In an industry note released on February 22, Deutsche Bank stated that while it appears unlikely that Trina Solar will reap any profits in the near term, it anticipates "profitability in 2H13 timeframe".

Providing some relief for Trina Solar, photovoltaic module shipments sequentially increased from around 380 MW in Q3, to approximately 415 MW in Q4, and annually from 1.51 GW in 2011, to around 1.59 GW in 2012. "The sequential increase in total shipments was primarily due to increased sales to China-based customers," explained the company in a statement released.

On the back of falling prices, the increase in shipments did not correlate to an increase in sales, however. Indeed, although Q4 net revenues rose slightly to $302.7 million, up from to $297.9 million in Q3, they were down on the $435.7 million reaped in Q4 2011. For the FY, meanwhile, net revenues fell from $2.05 billion in 2011, to hit $1.3 billion.

"Organizational restructuring, staff reductions and other expense control measures begun in the third quarter of 2012, offset by a provision for doubtful receivables of $14.5 million," led to a Q4 operating loss of $70.4 million, compared to $-76 million in Q3 and $62.9 million in Q4 2011. FY operating losses, meanwhile, reached a significant $264.9 million, compared to an operating income of $31 million in 2011.

This corresponded to an operating margin of negative 23.3% in Q4, compared to negative 25.5% in Q3, and negative 20.4% in 2012, compared to 1.5% in 2011. Gross margin was 1.9% in Q4, compared to 0.8% in Q3 and 7.1% in Q4 2011; and 4.4% in 2012, compared to 16.2% in 2011. And net margin was negative 28.8% in Q4, compared to negative 19.3% in Q3 and negative 15.1% in Q4 2011; and negative 20.6% in 2012, compared to negative 1.8% in 2011.

The last quarter of 2012 also saw Trina Solar enter into a number of agreements with the China Development Bank, including a one-year, $170 million credit facility, and a three-year, $80 million credit facility. They are "intended for working capital purposes," said the company.

Looking ahead to this year, Trina Solar estimates photovoltaic shipments of between 420 and 430 MW in Q1 and a gross margin in the low single digit percentage range. For the FY, it predicts combined module shipments and system deliveries of 2 to 2.1 GW.

Commenting, Jifan Gao, Chairman and CEO said he expects to Trina Solar to commence "grid-scale opportunities in China and the Americas later this year." Deutsche Bank added that it forecasts "rising utilization rates and share gains in markets such as China, U.S. to drive improving profitability over the next few quarters."