Chinese wafer and cell manufacturer Renesola has admitted defeat in its attempt to expand its in-house polysilicon manufacturing operation.
In an otherwise encouraging third-quarter trading update yesterday, the company had to swallow a US$194.7 million impairment hit as a result of its decision to abandon attempts to upgrade Phase I of its polysilicon manufacturing operation in Sichuan.
The trading update revealed the company had decided in October 2012 to try and upgrade the older Phase I section of its poly manufacturing to integrate it into the Phase II operation at the site.
Trial production runs from July to September this year, however, led to the conclusion, in October, the project had failed and it would be cheaper to close down the older operation and buy in polysilicon at market prices to augment the remaining 6,000 metric tonnes a year that Renesola will continue to produce.
The writedown on the older production line contributed to a third-quarter operating loss of $180.3 million, compared to a $16.6 million loss at the end of June and despite an increase in wafer and module shipments and revenues.
Shipments and revenues up
Total shipments for the three months to the end of September rose 0.2% to 851 MW with module shipments increasing in proportion on a 6.6% rise in shipments to 462.9 MW.
Renesola also trumpeted an 11.1% rise in net revenues to $419.3 million with gross profits up from $27.4 million to $34.1 million.
The company announced this month it will supply 63 MW of modules to North Carolina EPC contractor SunEnergy1 by the end of the month as well as more than 178,000 modules for use in a 53.5 MW project being developed by OCI Solar Power in the U.S.
With a confident prediction of 490-510 MW of module and wafer shipments in the final quarter, leading to 2013 full year shipments of 3-3.1 GW, and with cash balances up and total debt down, quarter on quarter, Renesola will be hoping to put the Sichuan writedown behind them as swiftly as possible.