Yingli Green lowers Q1 losses by more than half


China-based Yingli Green Energy, the largest manufacturer of PV modules in the world, has narrowed its net losses to CNY241.8 million ($55 million) in the first quarter of the year, down from $128.2 million reported in the fourth quarter of 2013.

Although revenues were markedly down – from $613 million in Q4 2013 to $432.2 million in Q1 2014 – losses were narrowed due to recovering module prices that boosted Yingli's margins. Module shipments in the first quarter amounted to 630.8 MW, a fall of 32.9% on the previous quarter as weak demand from China and a delay in module shipments for projects in Algeria hampered shipment figures.

The solar giant had expected shipment declines of around a third, owing to the aforementioned soft demand domestically. Yet early indications for Q2 suggest that demand in China has substantially increased, with emerging markets in Africa, Southeast Asia and South America also helping to swell shipment figures, the company said.

Yingli shares contracted by 35 cents per American depository share, and revenue of $432.2 million represented a worse-than-expected performance. Thomson Reuters had earlier polled a range of analysts who expected share losses to be just 24 cents and revenue to reach at least $464 million. Yingli underperformed on both counts.

Shipping optimism

Buoyed by the performance of the company's higher-priced PV modules, Yingli's overall gross margin grew from 12.2% to 15.7% in the first quarter, and gross profit strode in at $67.8 million, despite an operating margin of negative 4.8%.

"I'm pleased with the improvement in our gross margin in the first quarter of 2014, which is attributable to the slight increase in average selling price of PV modules and our ongoing efforts on cost reduction, and I have confidence in our ability to drive additional improvement moving forward," said Yingli Green Energy chairman and CEO Liansheng Miao.

"In the first quarter we witnessed a continued evolution of end demand diversification with exceptional demand from Japan and other emerging markets coupled with steady growth from the U.S. and stabilization in Europe, while module shipments in MW shrunk primarily due to the traditional seasonality and a slight delay in delivery for projects in Algeria," continued Miao.

The CEO also revealed that Yingli's proportion of shipments to emerging markets – outside of China, Europe and the U.S. – accounted for 35% of total shipments in 2014, more than double the share in the fourth quarter of last year.

Looking ahead, the company hopes to install a further 600 MW of PV capacity in China before the end of the year, with a large ground-mount project in Hebei Province on course for a Q3 completion. In total, Yingli's downstream project pipeline for China amounts to 1 GW.

Farther afield, the solar giant is on course to ship between 4 GW and 4.2 GW of modules for the fiscal year 2014, while Yingli Solar's advertising prominence at the FIFA World Cup will undoubtedly help raise the company's profile more widely. In anticipation of improved second-half performance, the company expects notable shipment improvement in Q2, targeting a sequential increase of 30% to 870 MW – 950 MW in module shipments.

However, Yingli remained tight-lipped on the possible impact the U.S. trade case may have on its bottom line in the near future. The company was stung earlier this month when the U.S. Department of Commerce (DOC) imposed a preliminary antisubsidy tariff of 26.89% on some Yingli modules.

CEO Miao said that the company was preparing to defend itself legally, but would not be drawn on speculating what impact these duties could have on the company, reiterating that the DOC’s impositions are, at this stage, preliminary.

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