JA Solar sees significant 2012 net loss

China-based photovoltaic module manufacturer, JA Solar has suffered a tough year with net losses spiraling downwards both sequentially and annually. And, while recorded module shipments are relatively positive, it had to retire 300 MW of cell and module production capacity, respectively, in Q4.

As of the end of December, JA Solar had an annual wafer production capacity of 1 GW, a cell production capacity of 2.5 GW and a module production capacity of 1.8 GW. It has said it intends to maintain these in the coming year.

At 500 MW, Q4 module shipments exceeded the company’s guidance of 420 MW. The figure was also better than Q3 and Q4 2011, which saw 418 MW and 398 MW shipped, respectively. FY shipments, meanwhile, rose marginally, from 1.69 GW in 2011, to approximately 1.7 GW in 2012. JA Solar expects them to be between 1.7 and 1.9 GW in 2013; Q1 is forecast to see between 410 and 430 MW shipped.

Shipments to Japan and China were said to have "increased significantly" in the final quarter of 2012. While they decreased in the U.S., due to seasonality, JA Solar is confident that the country will remain an important market. The Middle East, Australia and Latin America are also said to hold "promising long-term potential."

On the back of the uptick in Q4 shipments, net revenue also slightly sequentially increased, from RMB 1.6 billion ($263.2 million) in Q3 to RMB 1.7 billion ($268.1 million) in Q4. They slipped, however, from the RMB 1.95 billion ($312.3 million) reaped in Q4 2011. Annual revenues also fell, from RMB 10.7 billion ($1.7 billion) in 2011, to RMB 6.7 billion ($1.1 billion).

Most significantly affected was JA Solar’s net loss, which almost doubled in Q4, from RMB 371.4 million ($59.6 million) in Q3 and RMB 429.6 million ($68.3 million) in Q4 2011, to reach a very negative RMB 637.9 million ($102.4 million). The FY fared even worse, with net loss dropping from RMB 564.3 million in 2011, to RMB 1.7 billion ($275.8 million) in 2012.

These figures led to a Q4 loss per diluted ADS of RMB 16.50 ($2.65), compared to RMB 9.55 ($1.53) in Q3; and a loss of RMB 44.10 ($7.10) in 2012, compared to RMB 16.90 ($2.71) in 2011.

Operating expenses also grew, from RMB 534.6 million ($85.8 million) in Q3 and 496.7 million ($79.7 million) in Q4 2011, to reach RMB 472.5 million ($75.8 million) in Q4; and from RMB 881.8 million in 2011, to RMB 1.44 billion ($231.4 million) in 2012.

"Total operating expenses in the fourth quarter of 2012 included an accounts receivable provision of RMB 134.1 million ($21.5 million), and a long-lived asset impairment of RMB 147.1 million ($23.6 million) related to the retirement of 300 MW of outdated cell production capacity and 300 MW of outdated module production capacity," explained JA Solar in a statement released.

At RMB 549.6 million ($88.2 million), Q4 operating loss was slightly better than the RMB 631.3 million ($101.3 million) lost in Q3, but an increase on the RMB 487.6 million ($78.3 million) lost in Q4 2011. FY 2012 saw an enormous operating loss of RMB 1.5 billion ($240.1 million), compared to RMB 420.5 million ($67.5 million) in 2011.

Q4 gross loss meanwhile, was RMB 77.1 million ($12.4 million), compared to RMB 96.6 million ($15.5 million) in Q3 and a gross profit of RMB 9.1 million ($1.5 million) in Q4 2011. For the FY, it fell significantly to RMB 54.4 million ($8.7 million), compared to a gross income of RMB 461.3 million ($74.0 million) in 2011.

As such, Q4 recorded a gross margin of negative 4.6%, compared with negative 5.9% in Q3 positive 0.5% in Q4 2011; and negative 0.8% in 2012, compared to positive 4.3% in 2011.

Positive about JA Solar’s continued presence in the solar industry, Baofang Jin, executive chairman and CEO stated, "Moving into 2013, we remain focused on cost reduction and stringent cash management, while maintaining our leadership position in technology through continued R&D efforts and manufacturing process optimization.

"Ultimately, we believe JA Solar’s value proposition, which combines high-quality, high-efficiency products with prudent financial management, will see us emerge from this difficult environment as one of the industry’s long-term winners."