Trina Solar Announces Fourth Quarter and Full Year 2015 Results

Published on 4 Mar 2016
Trina Solar 
Trina Solar Limited today announced its unaudited financial results for the fourth quarter and full year of 2015.

Fourth Quarter 2015 Financial and Operating Highlights

- Total module shipments were 1,776.3MW, consisting of 1,579.7MW of external shipments and 196.6MW of shipments to the Company's own downstream power projects. This compares with total shipments of 1,703.2MW, consisting of 1,353.2MW of external shipments and 350.0MW of shipments to the Company's own downstream power projects in the third quarter of 2015.

- Net revenues were $961.9 million, an increase of 21.4% from the third quarter of 2015 and 36.4% from the fourth quarter of 2014.

- Gross profit was $183.3 million, an increase of 32.7% from the third quarter of 2015 and 65.1% from the fourth quarter of 2014.

- Gross margin was 19.1%, compared with 17.4% in the third quarter of 2015 and 15.7% in the fourth quarter of 2014.

- Operating income was $81.3 million, compared with $5.8 million in the third quarter of 2015 and $30.5 million in the fourth quarter of 2014.

- Net income attributable to Trina Solar's ordinary shareholders was $41.7 million, compared with a net loss of $20.0 million in the third quarter of 2015 and net income of $10.6 million in the fourth quarter of 2014.

- Earnings per fully diluted American Depositary Share ("ADS" and each ADS represents 50 of the Company's ordinary shares) were $0.43, compared with loss per fully diluted ADS of $0.24 in the third quarter of 2015 and earnings per fully diluted ADS of $0.13 in the fourth quarter of 2014.

Full Year 2015 Financial and Operating Highlights

- Total solar module shipments were approximately 5.74GW, an increase of 56.8% from 3.66GW in 2014.

- Total net revenues were $3.0 billion, an increase of 32.8% from 2014.

- Gross profit was $566.6 million, an increase of 47.0% from 2014.

- Gross margin was 18.7%, compared with 16.9% in 2014.

- Operating income was $177.0 million, an increase of 47.4% from 2014.

- Net income attributable to Trina Solar's ordinary shareholders for the full year was $76.5 million, an increase of 28.9% from 2014.

- Earnings per fully diluted ADS for 2015 were $0.86, compared with $0.74 in 2014.

Mr. Jifan Gao, Chairman and CEO of Trina Solar, commented, "We are pleased to report another quarter of record shipments and a sequential increase in earnings. Our module shipments during the quarter hit an all-time high of 1.78GW, which once again exceeded the high-end of our guidance. We continue to maintain our position as the world's largest solar module manufacturer and a leading solar project developer and operator."

"Our downstream business performed basically in-line with our expectations. We connected a total of 258.8MW of PV power projects to the grid in the fourth quarter, including 132.5MW of utility projects and 126.3MW of distributed generation (DG) projects in China. For the full year of 2015, we connected a total of 685.9MW of PV power projects to the grid around the world, of which about one third were DG projects in China."

"We continue to work diligently to maintain our position as a leading innovator of PV technology in the industry. We also view our R&D work as an important component of our strategy to diversify our product offerings and move our business into higher value-added areas. During the year, our R&D team accomplished a number of significant achievements, including three world records for our PERC solar cells and modules, which follow seven world records that we set in 2014. Our pilot line of interdigitated back contact solar cells (IBC) continued to reach new levels of efficiency, enabling us to use IBC solar cells and modules for high-value applications."

"2015 was in many ways a strong year for Trina Solar as we achieved record results on both a sequential and year-over-year basis in each quarter. During the year, we entered the Indian market and a number of other emerging markets, which helped to expand our global footprint from 43 to 63 countries. We also made progress on our global capacity expansion plans. Our partnered facilities in Vietnam and Malaysia, where we employ a relatively asset light model, helped to meet the growing demand for our products in overseas markets, and we expect our cell and module facility in Thailand to become operational in 2016. Our downstream business experienced more growth in China's highly competitive environment. All of these efforts have solidified our foundation and leave us well-positioned for 2016."

Fourth Quarter 2015 Results

Net Revenues 

Net revenues were $961.9 million, including downstream revenues from electricity generated by solar power projects and others of $34.6 million. Total net revenues represent an increase of 21.4% sequentially and an increase of 36.4% year-over-year. Total shipments were 1,776.3MW, consisting of 1,579.7MW of external shipments and 196.6MW of shipments to the Company's downstream power projects. This compares with total shipments of 1,703.2MW in the third quarter of 2015 and 1,098.8MW in the fourth quarter of 2014. The sequential increase in revenues and shipments was primarily due to rising shipment volumes to the U.S., Japan and the rest of Asia. The year-over-year increase in revenues and shipments was driven largely by growing demand from the U.S. and Asia.

Gross Profit and Margin

Gross profit was $183.3 million, compared with $138.2 million in the third quarter of 2015 and $111.0 million in the fourth quarter of 2014. 

Gross margin was 19.1%, compared with 17.4% in the third quarter of 2015 and 15.7% in the fourth quarter of 2014. The sequential increase in gross margin was mainly because of the increase in downstream revenues with higher gross margin as well as slight increase in module average selling price ("ASP").

Operating Expenses, Income and Margin

Operating expenses were $102.0 million, a decrease of 23.0% sequentially and an increase of 26.6% year-over-year. The sequential decrease was primarily because the third quarter included a $45.0 million provision for the settlement of a lawsuit brought against Trina Solar by Solyndra. The Company's operating expenses represented 10.6% of fourth quarter net revenues, a decrease from 11.0% for the third quarter of 2015, if excluded the one-off Solyndra settlement provision, and a decrease from 11.4% in the fourth quarter of 2014.

As a result, operating income was $81.3 million, compared with $5.8 million in the third quarter of 2015 and $30.5 million in the fourth quarter of 2014. Operating margin was 8.5%, compared with 0.7% in the third quarter of 2015 and 4.3% in the fourth quarter of 2014.

Net Interest Expense

Net interest expense was $13.2 million, compared with $13.1 million in the third quarter of 2015 and $8.3 million in the fourth quarter of 2014.

Foreign Currency Exchange Loss

The Company recorded a net foreign currency exchange loss of $11.4 million, which included a gain on the change in fair value of foreign exchange derivative instruments of $1.3 million. This compares with a net loss of $13.1 million in the third quarter of 2015 and a net loss of $7.6 million in the fourth quarter of 2014. The foreign currency exchange loss in the fourth quarter of 2015 primarily resulted from the depreciation of the RMB against the USD.

Income Tax Expense (Benefit) 

Income tax expense was $17.6 million, compared with an income tax benefit of $3.1 million in the third quarter of 2015 and an income tax expense of $1.7 million in the fourth quarter of 2014.

Net Income (Loss) and Earnings (Loss) per ADS

Net income attributable to ordinary shareholders of Trina Solar was $41.7 million, compared with net loss attributable to ordinary shareholders of $20.0 million in the third quarter of 2015 and net income attributable to ordinary shareholders $10.6 million in the fourth quarter of 2014.

Earnings per fully diluted ADS were $0.43, compared with loss per fully diluted ADS of $0.24 in the third quarter of 2015 and earnings per fully diluted ADS of $0.13 in the fourth quarter of 2014.

Financial Condition

As of December 31, 2015, the Company had $659.9 million in cash and cash equivalents, and restricted cash.

Build-to-sell project assets under current assets increased to $531.3 million as of December 31, 2015 from $30.2 million as of September 30, 2015 to reflect the strategic shift in the Company's downstream business from holding all of the Company's PV projects in China to selling a proportion of the projects during the quarter. As a result, some of the project assets were transferred from property, plant and equipment (PP&E) to current assets during the quarter. The Company's build-to-sell projects include the projects that were recently completed construction in China during the fourth quarter as well as projects that are under construction in China and overseas which are to be sold in the future.

With the new business model in our downstream business, in accordance with the accounting policies of the Company, the revenues generated from sales of build-to-sell project assets under current assets will be recognized as revenue if all revenue recognition criteria are met, whereas gain or loss from the disposal of build-to-own project assets under PP&E will be recorded as other operating income or expense in the income statement. In addition, incidental electricity income generated from the build-to-sell project assets prior to the sales of the projects will be recorded as other operating income, whereas electricity income generated from the Company's operation of the build-to-own project assets are recognized as service revenues if all revenue recognition criteria are met.

Total bank borrowings were $1,438.6 million as of December 31, 2015, of which $916.6 million were short-term borrowings and current portion of long-term borrowings. 

Shareholders' equity was $1,050.7 million as of December 31, 2015.

Full Year 2015 Results

Total module shipments during 2015 were 5.74GW, consisting of 4.83GW of external shipments and 912MW of shipments to the Company's downstream power projects, an increase of 56.8% from 3.66GW in 2014, primarily driven by strong demand from China, Japan and the U.S.

Net revenues were $3.0 billion, including downstream revenues from electricity generated by solar power projects, project sales and others of $168.7 million. Total net revenues represent an increase of 32.8% from $2.29 billion in 2014. Gross profit was $566.6 million, an increase of 47.0% from $385.6 million in 2014. Overall gross margin was 18.7%, compared with 16.9% in 2014. The gross margin expansion in 2015 was primarily due to a greater reduction in manufacturing costs compared with the general decline in ASP, as well as increased sales of overseas downstream solar projects and EPC services, which produce higher margins than module sales.

Operating profit was $177.0 million in 2015, compared with $120.1 million in 2014. Operating margin was 5.8%, compared with 5.3% in 2014.

Net income attributable to ordinary shareholders of Trina Solar was $76.5 million, compared with $59.3 million in 2014. Net margin was 2.5%, compared with 2.6% in 2014.

Earnings per fully-diluted ADS were $0.86, compared with $0.74 for 2014.

Operations and Business Updates

Manufacturing Capacity

As of December 31, 2015, the Company had the following annualized in-house manufacturing capacities:

- Ingot production capacity of approximately 2.3GW;

- Wafer capacity of approximately 1.8GW;

- PV cell capacity of approximately 3.5GW; and

- PV module capacity of approximately 5.0GW.

Project Development

In the fourth quarter of 2015, the Company connected a total of 258.8MW PV power projects to the grid, including 132.5MW of utility projects and 126.3MW of DG projects in China. The 132.5MW of utility PV power projects consisted of 42.5MW in Yunnan, which was a portion of a total 300.0MW project, 40.0MW in Xinjiang, 21.0MW in Hebei, 17.0MW in Anhui and 12.0MW in Jiangsu. The 126.3MW of DG projects consisted of 44.9MW in Jiangsu, 29.0MW in Shandong, 20.2MW in Anhui, 16.5MW in Hubei, 14.7MW in Zhejiang and 1.0MW in Henan.

In 2015, the Company connected a total of 685.9MW of PV power projects to the grid across the globe, of which, DG projects in China were 200.4MW, accounting for 29.2%.

As of December 31, 2015, the Company had a total of 869.2MW downstream solar projects in commercial operation, including 847.0MW in China, 4.2MW in the U.S., and 18.0MW in Europe. The 847.0MW projects in China consisted of 645.5MW of utility projects and 201.5MW of DG projects.

First Quarter and Fiscal Year 2016 Guidance

First Quarter 2016 Guidance

The Company expects to ship between 1.37GW to 1.45GW of PV modules, all of which will be shipped to third-party customers.

Fiscal Year 2016 Guidance

2016 Manufacturing Capacity Guidance

The Company expects to achieve the following annualized capacity at the end of 2016:

- Ingot production capacity of approximately 2.3GW

- Wafer capacity of approximately 1.8GW

- PV cell capacity of approximately 5.0GW

- PV module capacity of approximately 6.0GW

The Company expects total PV module shipments between 6.30GW and 6.55GW, of which 450MW to 550MW will be shipped to the Company's downstream projects, revenues of which will not be recognized.

The Company expects to connect to the grid between 750MW and 850MW of downstream PV power projects across the world, including 10 % to 15% of DG projects in China.


ENF Profiles For Companies Mentioned in This Article

Trina Solar (Solar Components): http://www.enfsolar.com/directory/component/2391
Trina Solar (Solar Materials): http://www.enfsolar.com/directory/material/2391
Trina Solar (Solar Panels): http://www.enfsolar.com/directory/panel/2391
Trina Solar (Solar System Installers): http://www.enfsolar.com/directory/installer/2391
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