Trina Solar announced yesterday its financial results for the third quarter of 2011.
Third Quarter 2011 Financial and Operating Highlights
Solar module shipments were approximately 370 MW for the third quarter of 2011, representing a decrease of 6.6% sequentially and an increase of 27.4% year-over-year.
Net revenues were $481.9 million, a decrease of 16.8% sequentially and 5.2% year-over-year
Gross profit was $52.0 million, a decrease of 47.1% sequentially and 67.4% year-over-year
Gross margin was 10.8% which includes a non-cash inventory write down of $19.1 million, compared to 17.0% in the second quarter of 2011 and 31.4% in the third quarter of 2010
Gross margin relating to the Company’s in-house wafer production to module production was 18.3%
Loss from operations was $23.5 million, compared to operating income of $32.8 million in the second quarter of 2011 and $113.0 million in the third quarter of 2010
Operating margin was negative 4.9%, compared to 5.7% in the second quarter of 2011 and 22.2% in the third quarter of 2010
Net loss was $31.5 million, compared to net income of $11.8 million in the second quarter of 2011 and $82.9 million in the third quarter of 2010
Earnings per fully diluted American Depositary Share (“ADS”) were negative $0.45, compared to $0.17 in the second quarter of 2011 and $1.08 in the third quarter of 2010
“We experienced a challenging third quarter as a result of significant price declines and tightened financing conditions, which affected some of our customers’ large European projects,” said Mr. Jifan Gao, Chairman and CEO of Trina Solar. “During the third quarter, we paid increasing attention to customer credit risks and in some cases regulatory risks linked to the underlying project markets, which resulted in our foregoing some sales opportunities. We also continued to maintain a strong balance sheet during this quarter.”
“To best position Trina Solar going forward, we are refining our marketing and product strategies to address larger and more diversified distribution channels, in both established and emerging solar markets. These include the growing US residential leasing channel, where we recently signed a 60 MW supply agreement in the fourth quarter.”
“As we focus on growth, the recent establishment of our Asia Pacific regional headquarters in Singapore will help us secure new customers in the Asia Pacific region, the Middle East and South Africa. In markets such as Australia and Southern Europe, as grid parity approaches, we believe that long-term success will ultimately depend on the effective delivery of innovative solutions based on efficient manufacturing and customer-driven value-added support services. Examples of our successful execution of this strategy include our total system cost-saving Trinamount module line and our recently launched multicrystalline-based ‘Honey’ technology-based module, which we believe achieved a world record output based on tests conducted by TUV Rheinland (“TUV”).”
Third Quarter 2011 Results
Net revenues in the third quarter of 2011 were $481.9 million, a decrease of 16.8% sequentially and 5.2% year-over-year. Total shipments were 370.1 MW, compared to 396.4 MW in the second quarter of 2011 and 290.5 MW in the third quarter of 2010. The sequential decrease in total shipments was primarily due to a reduction in available project financing for some customers’ European projects and the Company’s increased customer credit risk management.
Gross Profit and Margin
Gross profit in the third quarter of 2011 was $52.0 million, compared to $98.3 million in the second quarter of 2011 and $159.4 million in the third quarter of 2010.
Gross margin was 10.8% in the third quarter of 2011 which includes a non-cash inventory write down of $19.1 million, compared to 17.0% in the second quarter of 2011 and 31.4% in the third quarter of 2010.
Gross margin relating to the Company’s in-house wafer production to module production was 18.3% in the third quarter of 2011, compared to 20.4% in the second quarter of 2011 and 37.6% in the third quarter of 2010. The sequential reduction was primarily due to the decline in average module selling price exceeded the Company’s decline in manufacturing costs.
Inventory Write down
The Company made a non-cash inventory write down in the third quarter of $19.1 million based on the revaluation of its inventory as a result of notable market price declines of raw materials, work-in-progress and finished goods in the quarter.
Fourth Quarter and Fiscal Year 2011 Guidance
For the fourth quarter of 2011, the Company expects to ship between 320 MW to 350 MW of PV modules.
The Company believes its overall gross margin, taking into account wafer and cell requirements outsourced to third party suppliers to meet demand in excess of its internal capacity, for the fourth quarter will be approximately 10%. Such guidance is based on the exchange rate between the Euro and U.S. dollar as of November 21, 2011. Based on its demand outlook for the fourth quarter of 2011, the Company has revised its outlook for the full year 2011 PV module shipment to approximately 1.4 GW, representing an increase of approximately 32.5% from 2010, compared to the Company’s previous guidance of between 1.75 GW to 1.8 GW.
Further details about: Trina Solar
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