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Yingli Green Energy Reports Third Quarter 2014 Results

Published on 26 Nov 2014
Yingli Green Energy 
Yingli Green Energy Holding Company Limited today announced its unaudited consolidated financial results for the quarter ended September 30, 2014.

Third Quarter 2014 Consolidated Financial and Operating Summary

- Total net revenues were RMB 3,385.2 million (US$551.5 million).

- Total PV module shipments (including shipments for PV systems) were 903.4MW.

- Gross profit was RMB 706.1 million (US$115.0 million), representing a gross margin of 20.9%.

- Operating income was RMB 199.7 million (US$32.5 million), representing an operating margin of 5.9%.

- On an adjusted non-GAAP basis, earnings before interest, tax expenses, depreciation and amortization (EBITDA) were RMB 495.7 million (US$80.8 million).

- Net loss was RMB 122.8 million (US$20.0 million) and loss per ordinary share and per American depositary share ("ADS") was RMB 0.68 (US$0.11). On an adjusted non-GAAP basis, net loss was RMB 112.0 million (US$18.2 million) and loss per ordinary share and per ADS was RMB 0.62 (US$0.10).

"I'm very pleased to report that we delivered another set of solid results in the third quarter of 2014 with a gross margin of 20.9%, well ahead of our previous guidance, and a strong PV module shipment of 903MW," commented Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. "We continue to successfully improve our operating profitability through on-going efforts on cost reduction and effective operating expenses control. The operating income in the third quarter of 2014 turned into positive for the first time since the second quarter of 2011."

"In the third quarter, we continued to see a remarkable demand for Yingli Solar modules from key markets, such as China, Japan and other new emerging markets. In particular, our shipments to new emerging markets in the third quarter increased by approximately 17% quarter over quarter. With the booming installation for domestic projects in the second half of 2014, the third quarter witnessed comparatively higher average selling prices and better payment terms for solar panels. Shipments to China have increased by approximately 19% compared to the second quarter. In September 2014, China's National Energy Administration ("NEA") published new policies to accelerate distributed solar generation. Under this new policy, we had received approval of additional 120MW of distributed solar generation projects in September 2014. In addition, we saw substantial growth in Japan with an over 30% quarterly increase in the third quarter. Recently, we signed a series of agreements to supply over 100MW of polycrystalline solar panels in Japan. Due to our long-standing reputation for high quality products and services and our large and loyal customer base, our presence in traditional markets such as Europe and the U.S. has remained solid. We have signed a landmark agreement to supply 120MW of solar panels for one project in France, which will be the largest solar power park in Europe upon its completion."

"Despite the slower than expected development of downstream projects in the first half of 2014, we are progressing well in the downstream in the second half of 2014. In the third quarter, we began to construct 185MW of downstream projects, bringing our projects under construction to a total of 340MW, with internal shipments to these projects having reached to 187MW. In the fourth quarter, we expect to start the construction of 50 to 60MW of downstream projects in total. Thus we expect to develop approximately 400MW of downstream projects by ourselves or together with our partners by the end of 2014. We expect to sell about half of these projects upon completion of the construction. Among them, a 15MW solar project in Hebei has been substantially completed and transferred to a renewable fund jointly established by the Company and Shanghai Sailing Capital Investment Fund."

"In order to seek a balance between our shipment volume and profitability, we decide to revise our shipment guidance for full year of 2014 to 3.3-3.35GW," Mr. Miao concluded.

Third Quarter 2014 Financial Results

Total Net Revenues

Total net revenues were RMB 3,385.2 million (US$551.5 million) in the third quarter of 2014, compared to RMB 3,408.9 million in the second quarter of 2014 and RMB 3,649.4 million in the third quarter of 2013. Total PV module shipments were 903.4MW in the third quarter of 2014 (including 109.0MW shipments for PV systems to the Company's own downstream power plants in China), compared to 887.9MW in the second quarter of 2014. Revenues were not recognized for the 109.0MW of internal shipments as required by U.S. GAAP.

Gross Profit and Gross Margin

Gross profit was RMB 706.1 million (US$115.0 million) in the third quarter of 2014, significantly improved from RMB 532.1 million in the second quarter of 2014 and RMB 498.8 million in the third quarter of 2013.

Gross margin was 20.9% in the third quarter of 2014, substantially improved from 15.6% in the second quarter of 2014 and 13.7% in the third quarter of 2013. The significant increase of gross margin was primarily due to the decreased cost of PV module as a result of the Company's continuous efforts on cost reduction through all processes of PV module manufacturing.

Operating Expenses

Operating expenses were RMB 506.4 million (US$82.5 million) in the third quarter of 2014, compared to RMB 618.1 million in the second quarter of 2014 and RMB 569.1 million in the third quarter of 2013. The decrease of operating expenses was mainly due to the Company's enhanced control of operating expenses, especially the general and administrative expenses and the selling expenses.

Operating expenses as a percentage of total net revenues were 15.0% in the third quarter of 2014, improved from 18.1% in the second quarter of 2014 and 15.6% in the third quarter of 2013.

Operating Income and Margin

Operating income was RMB 199.7 million (US$32.5 million) in the third quarter of 2014, improved from operating losses of RMB 85.9 million in the second quarter of 2014 and RMB 70.3 million in the third quarter of 2013.

Operating margin was 5.9% in the third quarter of 2014, improved from negative 2.5% in the second quarter of 2014 and negative 1.9% in the third quarter of 2013.

EBITDA

On an adjusted non-GAAP basis, earnings before interest, tax expenses, depreciation and amortization (EBITDA) were RMB 495.7 million (US$80.8 million) in the third quarter of 2014, improved from RMB 288.5 million in the second quarter of 2014 and RMB 311.5 million in the third quarter of 2013.

Interest Expense

Interest expense was RMB 263.1 million (US$42.9 million) in the third quarter of 2014, compared to RMB 232.4 million in the second quarter of 2014 and RMB 268.3 million in the third quarter of 2013. As of September 30, 2014, the Company had an aggregate of RMB 14.5 billion (US$2.4 billion) of bank borrowings and medium-term notes outstanding, which decreased from RMB 14.9 billion as of June 30, 2014. The weighted average interest rate was 6.31% in the third quarter of 2014, compared to 6.25% in the second quarter of 2014 and 6.29% in the third quarter of 2013.

Foreign Currency Exchange Loss (Gain)

Foreign currency exchange loss was RMB 112.0 million (US$18.2 million) in the third quarter of 2014, compared to foreign currency exchange gain of RMB 2.8 million in the second quarter of 2014 and foreign currency exchange gain of RMB 41.3 million in the third quarter of 2013. The foreign currency exchange loss was mainly due to the depreciation of the euro against the Renminbi in this quarter, and the Company has significant balance of net current assets, which is dominated in euro.

Income Tax Expense (Benefit)

Income tax expense was RMB 19.0 million (US$3.1 million) in the third quarter of 2014, compared to income tax expense of RMB 1.2 million in the second quarter of 2014 and RMB 23.0 million in the third quarter of 2013.

Net Loss

Net loss was RMB 122.8 million (US$20.0 million) in the third quarter of 2014, compared to RMB 285.2 million in the second quarter of 2014 and RMB 235.6 million in the third quarter of 2013. Loss per ordinary share and per ADS was RMB 0.68 (US$0.11), compared to RMB 1.64 in the second quarter of 2014 and RMB 1.50 in the third quarter of 2013.

On an adjusted non-GAAP basis, net loss was RMB 112.0 million (US$18.2 million) in the third quarter of 2014, compared to RMB 275.0 million in the second quarter of 2014 and RMB 226.6 million in the third quarter of 2013. Adjusted non-GAAP loss per ordinary share and per ADS was RMB 0.62 (US$0.10) in the third quarter of 2014, compared to RMB 1.58 in the second quarter of 2014 and RMB 1.45 in the third quarter of 2013.

Balance Sheet Analysis

As of September 30, 2014, the Company had RMB 768.4 million (US$125.2 million) in cash and cash equivalents, compared to RMB 981.5 million as of June 30, 2014.

As of September 30, 2014, the Company had RMB 1,417.4 million (US$230.9 million) in restricted cash, compared to RMB 1,493.6 million as of June 30, 2014.

As of September 30, 2014, accounts receivable were RMB 5,317.9 million (US$866.4 million), compared to RMB 4,995.0 million as of June 30, 2014. Days sales outstanding were 141 days in the third quarter of 2014, compared to 132 days in the second quarter of 2014.

As of September 30, 2014, inventory was RMB 2,719.4 million (US$ 443.0 million), compared to RMB 2,289.7 million as of June 30, 2014. Inventory turnover days was 91 days in the third quarter of 2014, compared to 72 days in the second quarter of 2014.

As of September 30, 2014, accounts payable were RMB 5,451.3 million (US$ 888.1 million), compared to RMB 5,418.6 million as of June 30, 2014. Days payable outstanding was 183 days in the third quarter of 2014, compared to 170 days in the second quarter of 2014.

As of the date of this press release, the Company had approximately RMB 5,530 million in unutilized short-term lines of credit and RMB 2,279 million committed long-term facility that can be drawn down in the near future. The Company is currently exploring financing options to alleviate near-term pressure on the Company's liquidity and enhance financial flexibility.

Business Outlook for Full Year 2014

Based on current market and operating conditions, estimated production capacity and forecasted customer demand, the Company revises its current PV module shipment target to be in the estimated range of 3.30GW to 3.35GW (including 200 to 240MW shipment for PV systems) for fiscal year 2014, which represents an increase of 3.0% to 4.6% compared to fiscal year 2013.

Downstream Development in 2014

Currently, the Company has in the aggregate approximately 1.4GW of PV projects pipeline at different approval stages across a dozen of provinces in China. During the third quarter of 2014, the Company started the constructions of approximately 185MW of PV projects. As of September 30, 2014, the Company had accumulatively 340MW of PV projects under construction. These PV projects were included in the consolidated financial statements. In the fourth quarter, the Company plans to start constructions of 50 to 60MW of PV projects in total.

Based on the current project development status and the progress of project pipelines, the Company now expects to develop approximately 400MW of PV projects by the end of 2014.

Non-GAAP Financial Measures

To supplement the financial measures calculated in accordance with GAAP, this press release includes certain non-GAAP financial measures of adjusted gross profit, adjusted gross margin, adjusted operating loss, adjusted operating margin, adjusted net income (loss), adjusted diluted earnings (loss) per ordinary share and per ADS and EBITDA, each of which (other than EBITDA) is adjusted to exclude, as applicable, items related to share-based compensation, interest expense related to the changes in the fair value of the interest-rate swap and the amortization of the debt discount, the amortization of intangible assets, inventory provision, impairment of long-lived assets and non-cash provision for inventory purchase commitments. EBITDA excludes interest, tax expenses, depreciation and amortization. The Company believes excluding these items from its non-GAAP financial measures is useful for its management and investors to assess and analyse the Company's on-going performance as such items are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial information included elsewhere in this press release.


ENF Profiles For Companies Mentioned in This Article

Yingli Green Energy (Solar Materials): https://www.enfsolar.com/yingli-green-energy
Yingli Green Energy (Solar Panels): https://www.enfsolar.com/yingli-green-energy
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