Chinese manufacturers predict Q1 to be tougher than expected

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Two of the industry's biggest players in China have revised their first quarter earnings projections downwards, citing difficulties with the markets in which they operate.

Manufacturers Yingli and Trina Solar now both project that their first-quarter shipments will fall rapidly. Yingli predicts that first-quarter shipments will fall 30% between Q4 2013 and Q1 2014. Previous expectations for the decline had been pegged in the mid-20% range. Trina Solar said it expected its solar module shipments to be between 540 MW and 570 MW, down from the previous guidance of 670 MW to 700 MW. Overall, Trina Solar expects its actual shipments for Q1 2014 to be nearly 20% lower than previously predicted.

The companies laid out the reasons for the falls in separate statements, with Yingli blaming weak Chinese demand and delays in its Algerian projects while Trina Solar said it was primarily due to a temporary decrease in shipments to the EU. Yingli led a group of companies that were awarded a contract in December to supply 233 MW of projects to Algeria.

Jifan Gao, chairman and CEO of Trina Solar, said, “Given the temporary decrease in Q1 shipments to the European markets pending the finalization of the price undertaking adjustment, we are updating our guidance for the first quarter of 2014. We expect demand in certain European countries to remain strong, and our first-rate reputation and strong customer service will continue to allow Trina, as a market leader, to capture opportunities and achieve growth in the European markets. We will maintain our strategic focus on diversifying our business across a wider geographical footprint and delivering sustainable growth. We believe achieving increased gross margins will further support improved bottom line growth quarter over quarter."

Both companies predicted despite the disappointing Q1 predictions that business will pick up throughout the rest of the year. Yingli said that this would be due to strong demand from Japan and the US. As a consequence, Yingli's full-year shipment guidance of 4.0 to 4.1 GW remains unchanged.

The news from both companies was showcased in a disappointing Friday for a handful of solar firms listed in the U.S. The Wall Street Journal‘s ‘Market Watch' reporting that Yingli's U.S.-listed shares fell 5.4% on Friday. Shares for the firms Sunpower and JinkoSolar fell by 3% and 2.4%. Trina Solar and SolarCity shares actually rose by 1% and 2.3%. SunEdison shares went up by 0.3%.

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