Trina Solar Announces Second Quarter 2013 Results

trina solar

Trina Solar Announces Second Quarter 2013 Results.


CHANGZHOU, China/Trina Solar Limited (TSL) (“Trina Solar” or the “Company”), a global leader in photovoltaic (“PV”) modules, solutions, and services, today announced its financial results for the second quarter of 2013.

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Second Quarter 2013 Financial and Operating Highlights

  • Solar module shipments were approximately 647 MW during the second quarter of 2013, representing a sequential increase of 64.6% from the first quarter of 2013
  • Net revenues were 330.41€ million, an increase of 69.4% from the first quarter of 2013
  • Gross profit was 38.39€ million, compared to 3.3€ million in the first quarter of 2013
  • Gross margin was 11.6%, compared to 1.7% in the first quarter of 2013
  • The Company recorded an additional accounts receivables provision of 6.52€ million in the second quarter of 2013
  • The Company had a charge of 6.82€ million for certain assets that it ceased using during the second quarter of 2013
  • Operating loss was 17.92€ million, compared to 30.06€ million in the first quarter of 2013
  • Operating margin was negative 5.4%, compared to negative 15.4% in the first quarter of 2013
  • Net loss was 25.27€ million, compared to a net loss of 47.76€ million in the first quarter of 2013
  • Loss per fully diluted American Depositary Share (“ADS” and each ADS represents 50 of the Company’s ordinary shares) was 0.35€, compared to 0.67€ in the first quarter of 2013

“I am pleased to announce that we achieved record quarterly shipment numbers in the second quarter of 2013, exceeding our original guidance by more than 100 MW,” said Mr. Jifan Gao, chairman and CEO of Trina Solar.

With robust global demand, we took full advantage of our global sales network and strong brand to seize available commercial opportunities. In terms of pricing, the average selling price (“ASP”) of modules has stabilized, reversing the falling trend seen in previous quarters. As a result of our on-going efforts to improve operational efficiency and control manufacturing costs, we achieved continuing reductions in non-silicon costs, which contributed to quarter-on-quarter margin improvement.

“In the second quarter, there was regulatory uncertainty surrounding the E.U.’s anti-dumping case against PV imports from China. Geographic diversification of revenue helped to mitigate such regulatory risks. We achieved strong sequential shipment increases in growth markets, including China, the U.S., India and Japan, which added to our stable shipments to Europe. We continue to monitor the latest developments in the trade case and are encouraged by the recent solution negotiated between the E.U. and China. We remain committed to continuing to serve our customers and business partners in Europe, with whom we have built strong relationships.

“In terms of project development, we made good progress on the 50 MW power plant project in Wuwei, Gansu Province, China in the second quarter. Construction has been completed and we expect the facility to be grid connected and commence initial electricity generation by the end of the third quarter of 2013. For our downstream systems business, we remain focused on research and development and committed to delivering innovative products and solutions to lower installation costs, while enhancing the efficiencies and ease-of-use of solar energy.

“Following the end of the second quarter, we completed the redemption of all remaining outstanding convertible senior notes when they became due in July 2013. We continue to manage our balance sheet and liquidity position carefully, which will ensure that we have the necessary resources to develop downstream opportunities.”

Recent Business Highlights

During the second quarter of 2013, the Company:

Filed its annual report on Form 20-F for the fiscal year ended December 31, 2012 with the Securities and Exchange Commission on April 2, 2013.

Announced that Jodie Roussell, Head of Public Affairs Europe at TrinaSolar, had been elected Vice-President of the Board of the European Photovoltaic Industry Association (EPIA) at the EPIA’s annual general meeting in Brussels in March 2013.

Announced that Semiconductor Equipment and Materials International (“SEMI”) has approved two standards submitted by Trina Solar: the “Specification for Packaging Protection Technology for PV Modules” (SEMI PV44-0513) and the “Test Method for the Content of Vinyl Acetate (VA) in Ethylene-vinyl Acetate (EVA) Applied in PV Modules Using Thermal Gravimetric Analysis (TGA)” (SEMI PV45-0513). Trina Solar is the first PV company in China to lead the establishment of an international SEMI standard.

Subsequent Events

Subsequent to the second quarter of 2013, the Company:

Announced that it has received the new International Electrotechnical Commission (IEC) 61730-2 standard certification with Class A Fire Safety from TUV Rheinland for its new frameless PDG5 module. Trina Solar is the first manufacturer in Asia to achieve this certification. TUV Rheinland’s testing rated the PDG5 dual glass module to the highest level of fire resistance.

Announced the commercial availability of an enhanced version of its industry-leading Trinasmart modules, embedded with Smart Curve technology. Trinasmart is a module-integrated solution that optimizes the energy output of PV systems, enhances the safety of solar arrays, improves the installation speed of an array and reduces balance of system costs. The technology allows roof sections that are prone to shading to be utilized without causing power loss to the entire system, increasing output within one string by up to 20 percent.

Announced that it has supplied 7 MW of photovoltaic modules to Ikaros Solar, a leading company dedicated to the installation of green solar energy systems, for an agricultural project at Goose Willow Farm in the town of Abington in the U.K.

Announced that it had redeemed, together with all accrued but unpaid interest, all remaining outstanding convertible senior notes due 2013 on July 15, 2013. With the completion of this redemption, Trina Solar has no outstanding convertible debt.

Announced that it will provide 1.1 million of its 72-cell PV multi-crystalline modules (a total of 345 MW in DC power; equivalent to approximately 250 MW AC) to the Copper Mountain Solar 3 project in Boulder City, Nevada, USA. The project is owned and operated by Sempra U.S. Gas & Power and will be constructed by AMEC. The modules will start being shipped from Q4 2013 and the project is expected to be completed in Q1 2015.

Second Quarter 2013 Results

Net Revenues

Net revenues in the second quarter of 2013 were 330.41€ million, an increase of 69.4% sequentially and 27.4% year-over-year. Total shipments were 646.6 MW, compared to 392.9 MW in the first quarter of 2013 and 418.8 MW in the second quarter of 2012. The sequential increase in shipments was caused primarily by robust global demand, which, together with the stabilizing ASP, led to an increase in revenues.

Gross Profit and Margin

Gross profit in the second quarter of 2013 was 38.39€ million, compared to a gross profit of 3.3€ million in the first quarter of 2013 and 21.74€ million in the second quarter of 2012.

Gross margin was 11.6% in the second quarter of 2013, compared to 1.7% in the first quarter of 2013 and 8.4% in the second quarter of 2012. The sequential increase was primarily due to the stabilization of the ASP of modules and decreases in costs while the year-on-year increase in gross margin was primarily due to decreases in costs that exceeded declines in the ASP of modules.

Operating Expense, Loss and Margin

Operating expenses in the second quarter of 2013 were 56.31€ million, an increase of 68.7% sequentially and a decrease of 30.2% year-over-year. The Company’s operating expenses represented 17.0% of its second quarter net revenues, a decrease from 17.1% in the first quarter of 2013 and 31.1% in the second quarter of 2012. The sequential increase was primarily due to an additional accounts receivables provision of 6.52€ million in the second quarter of 2013 compared to an accounts receivables provision reversal of 8.32€ million in the first quarter of 2013. The year-over-year decrease was primarily due to the reduction of accounts receivables provision. Operating expenses in the second quarter of 2013 included 1.27€ million in share-based compensation expenses, compared to 0.82€ million in the first quarter of 2013 and 2.02€ million in the second quarter of 2012.

As a result of the foregoing, operating loss in the second quarter of 2013 was 17.92€ million, compared to operating losses of 30.06€ million in the first quarter of 2013 and 58.93€ million in the second quarter of 2012. Operating margin was negative 5.4% in the second quarter of 2013, compared to negative 15.4% in the first quarter of 2013 and negative 22.7% in the second quarter of 2012.

Net Interest Expense

Net interest expense in the second quarter of 2013 was 8.25€ million, compared to 9.9€ million in the first quarter of 2013 and 6.97€ million in the second quarter of 2012. The sequential decrease in net interest expense was primarily due to a decrease in average bank borrowings in the second quarter of 2013.

Foreign Currency Exchange Loss

The Company had a foreign currency exchange loss of 1.65€ million in the second quarter of 2013, which included changes in fair value of derivative instruments, compared to a net loss of 14.25€ million in the first quarter of 2013 and 16.87€ million in the second quarter of 2012. This net loss was primarily due to the exchange rate fluctuation of certain foreign currencies against the functional currencies of the Company’s subsidiaries during the second quarter of 2013, offset by gains from foreign currency hedging contracts involving the Euro, Renminbi, British Pound, and U.S. Dollar used by the Company to mitigate its foreign currency risk exposure.

Income Tax Benefit

Income tax benefit was 0.67€ million in the second quarter of 2013, compared to 4.57€ million in the first quarter of 2013 and 12.07€ million in the second quarter of 2012. The income tax benefit in the second quarter of 2013 primarily resulted from a deferred tax benefit recognized for the net losses incurred in the quarter, net of provision for valuation allowance.

Net Loss and Loss per ADS

As a result of the foregoing, net loss was 25.27€ million in the second quarter of 2013, compared to net loss of 47.76€ million in the first quarter of 2013 and 69.05€ million in the second quarter of 2012.

Net margin was negative 7.6% in the second quarter of 2013, compared to negative 24.5% in the first quarter of 2013 and negative 26.6% in the second quarter of 2012.

Loss per fully diluted ADS was 0.35€ in the second quarter of 2013. The impact of the additional accounts receivables provision was approximately 0.09€ per ADS, while the effect of the charge for fixed assets ceased to be used was approximately 0.1€ per ADS.

Financial Condition

As of June 30, 2013, the Company had 464.24€ million in cash and cash equivalents and restricted cash. Total bank borrowings were 839.71€ million, of which 729.49€ million were short-term borrowings. The Company decreased its long-term borrowings by 186.31€ million to approximately 110.21€ million as of June 30, 2013.

During the second quarter of 2013, the Company repurchased 19.94€ million of its convertible senior notes due July 2013, which resulted in a gain of 0.22€ million. Subsequent to the second quarter of 2013, the Company redeemed, together with all accrued but unpaid interest, all remaining outstanding convertible senior notes on July 15, 2013.

Shareholders’ equity was 593.19€ million as of June 30, 2013, a decrease from 617.26€ million at the end of the first quarter of 2013.

Third Quarter and Fiscal Year 2013 Guidance

During the third quarter of 2013, the Company expects to ship between 650 MW to 680 MW of PV modules.

The Company believes its overall gross margin for the third quarter, taking into account wafer and cell quantities outsourced from third party suppliers to meet demand in excess of its internal capacity and other needs, will be in the low double digits in percentage terms. Such guidance is based on the exchange rate between the Euro and U.S. dollar as of Aug 20, 2013.

For the full year 2013, the Company revises its previous PV module shipment guidance of between 2.0 GW and 2.1 GW to 2.3 GW and 2.4 GW.

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