China Sunergy Announces Third Quarter 2015 Financial Results

China Sunergy NASDAQ

China Sunergy Co., Ltd. (NASDAQ: CSUN), a specialized solar cell and module manufacturer, today announced its financial results for the third quarter ended September 30, 2015.

These results are being released about three months late – typically, we should have had these results at the end of October 2015.  These results highlight a a rapidly decreasing gross margin, a sizeable loss and a company very dependent on sales in Asia, China in particular.

Third Quarter 2015 Financial Highlights

  • Total revenue was US$111.1 million, an increase of 27.0% from US$87.5 million in the second quarter of 2015. The revenue for self-branded products totaled US$107.3 million and the revenue for the products processed under the OEM arrangement wasUS$2.6 million.
  • Shipments totaled 308.9MW, an increase of 67.4% (124.4MW) from 184.5MW in the second quarter of 2015. Module shipments, including module processed under OEM arrangement of 54.3MW, were 208.4MW. Cell shipments, including cell processed under OEM arrangements of 6.1 MW, were 100.5MW.
  • Average selling price (“ASP”) for the Company’s modules, excluding those processed under OEM arrangements, was US$0.52per watt, compared with US$0.58 per watt in the second quarter of 2015.
  • Gross profit was US$3.3 million and gross margin was 2.9%, compared with gross profit of US$6.1 million on gross margin of 6.9% in the second quarter of 2015.
  • Net loss attributable to ordinary shareholders was US$22.0 million, compared with US$10.5 million in the second quarter of 2015.
  • Net loss attributable to ordinary shareholders per ADS was US$1.48, compared with US$0.71 in the second quarter of 2015.
  • Cash, cash equivalents and restricted cash totaled US$120.4 million as of September 30, 2015.

Third Quarter 2015 Financial Review

Total Revenue and Shipments

For the third quarter of 2015, total revenue was US$111.1 million, compared with US$87.5 million in the second quarter of 2015. The increase in revenue was mainly due to higher shipments in self-branded solar cells and modules. Revenue from the Company’s self-brand modules and cells business totaled US$107.3 million or 96.5% of the total revenue, while revenue generated from the modules and cells processed under OEM arrangement, was US$2.6 million, or 2.4% of total revenue.

Total shipments for the third quarter of 2015 were 308.9MW, an increase of 67.4% from 184.5MW in the previous quarter. The increase in total shipments was primarily resulted from the strong demand in Chinese market. The total shipments to China increased to 195.5MW in the quarter ended September 30, 2015, compared with 48.2MW in the previous quarter. Total module shipments, including modules processed under OEM arrangement of 54.3MW, were 208.4MW for the third quarter of 2015. Total cell shipments, including cell processed under OEM arrangements of 6.1 MW, were 100.5MW for the third quarter of 2015.

Sales revenue derived from Asian market accounted for 72.9% of total revenue in the third quarter of 2015, of which 52.0% of total revenue was generated from China and 9.8% of total revenue was derived from India. In addition, sales to European and American markets represented 17.0% and 8.5% of total revenue in the quarter ended September 30, 2015. Sales revenue contributed by Asia,Europe and America as percentage of total revenue was 39.3%, 25.2% and 34.4%, respectively in the quarter ended June 30, 2015.

ASP

ASP for the Company’s self-branded modules for the third quarter of 2015 was US$0.52 per watt, compared with US$0.58 per watt in the previous quarter. The decrease of ASP for the third quarter of 2015 was primarily due to higher shipments to lower price regions. ASP for the Company’s self-branded cells during the third quarter of 2015 was US$0.28 per watt, compared with $0.26 per watt in the previous quarter.

Wafer and Conversion Costs

Blended wafer costs in the third quarter of 2015 were US$0.20 per watt and remained flat as compared to previous quarter. Conversion costs of cells and modules manufactured in the third quarter of 2015 were US$0.12 and US$0.18 per watt, respectively, compared withUS$0.14 and US$0.18 per watt, respectively, in the previous quarter. The two-cent decrease in the conversion costs of cells was primarily due to the higher output.

Gross Profit and Gross Margin

Gross profit for the third quarter of 2015 was US$3.3 million on gross margin of 2.9%, compared with gross profit of US$6.1 million on gross margin of 6.9% for the second quarter of 2015. The decrease in gross profit and gross margin was primarily due to a faster rate of decline in average selling price for self-branded solar modules as compared to the decrease in the products’ unit cost. In addition, a change in geographical mix resulted from higher shipments to lower-margin markets, combined with gross loss for the sales of self-branded solar cells contributed to the margin decrease in the quarter ended September 30, 2015. During the quarter, the unit purchasing price for wafer increased by approximately 5.6% compared with previous quarter, which heightened the unit cost of solar cells.

Operating Expenses, Operating Income (Loss) and Net Loss

Operating expenses increased to US$16.3 million in the third quarter of 2015, from US$13.9 million in the second quarter of 2015. The sequential increase in operating expenses was primarily due to the increase in general and administration expenses. During the third quarter of 2015, general and administration expenses were US$11.4 million during the third quarter of 2015, increased by US$2.7 millionas compared to US$8.7 million in the second quarter of 2015. The increase was partly attributable to the increase in bad debt provision of approximately US$1.6 million.

Loss from operations was US$13.0 million in the third quarter of 2015, compared with loss from operations of US$7.8 million in the second quarter of 2015. In addition, the Company had other expenses of US$1.3 million versus other income of US$1.7 million in the previous quarter, which was primarily due to the foreign exchange loss incurred from the depreciation of RMB against U.S dollar.

Correspondingly, net loss attributable to ordinary shareholders was US$21.7 million in the third quarter of 2015, compared with US$10.5 million in the previous quarter.

Amount Due from/to Related Parties

Amount due from related parties totaled US$88.9 million as of September 30, 2015, a decrease of US$1.6 million compared to US$90.5 million as of June 30, 2015. Amount due to related parties totaled US$4.7 million as of September 30, 2015, an increase of US$1.1 million compared to US$3.6 million as of June 30, 2015.

Inventory

Inventories at the end of the third quarter of 2015 totaled US$72.2 million, a decrease of US$13.7 million from US$85.9 million at the end of the second quarter of 2015, which was mainly due to higher shipments during the quarter.

Advance to suppliers

Advance to suppliers totaled US$20.6 million at the end of the third quarter of 2015, an increase of US$11.9 million from US$8.7 millionat the end of the second quarter of 2015. The increase was mainly driven by the higher shipments and strong demand for solar modules.

Accrued expenses and other current liabilities

As of September 30, 2015, accrued expenses and other current liabilities increased to US$41.2 million from US$26.2 million as of June 30, 2015. The increase in accrued expenses was primarily resulted from the increase in the accrual of interest expenses of approximately US$2.2 million. The increase in other current liabilities was mainly due to the increased advance from clients of US$12.8 million.

Cash Position

As of September 30, 2015, the Company had cash and cash equivalents of US$30.9 million, and restricted cash of US$89.5 million.

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This post was prepared by Solar Thermal Magazine staff.

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