ReneSola publishes its Q3 2013 financial results, reporting net revenues of $419.3 million, up 92.2% from a year ago, and significantly above the estimate of $360.7 million. However, the company’s net loss of $2.23 per ADS is far larger than the estimated loss of $0.22, causing the shares to fall 20%.
Third quarter 2013 financial and operating highlights from the company:
- Net revenues were $419.3 million, an increase of 11.1% from $377.4 million in Q2 2013.
- Gross profit was $34.1 million with a gross margin of 8.1%, up from a gross profit of $27.4 million, with a gross margin of 7.3% in Q2 2013.
- Operating loss was $180.3 million, representing an operating margin of negative 43.0%, compared to an operating loss of $16.6 million with an operating margin of negative 4.4% in the previous quarter.
- Net loss attributable to holders of ordinary shares was $200.3 million, representing basic and diluted loss per share of $1.12 and basic and diluted loss per American depositary share (ADS), each representing two shares, of $2.23.
- Total solar wafer and module shipments were 851MW, up 0.2% from 849.3MW in Q2 2013. Total module shipments were 462.9MW, an increase of 6.6% from 434.1MW in Q2 2013.
“During the third quarter, we continued to grow our module business while increasing the geographic diversity of our sales, resulting in another quarter of record shipments and revenue that exceeded guidance,” said Xianshou Li, ReneSola’s CEO. “We had strong results in our target markets overseas, particularly in the United States, which positively impacted our average selling price. We also explored more extensively our global footprint by adding OEM capacity in more regions and further expanding our overseas sales distribution network to both existing and new markets. Strong overall demand supported growth in our total module shipments and selling prices, a trend we expect to continue in the fourth quarter. In the third quarter, we achieved a gross margin of over eight percent, an improvement from last quarter. We also received certification for a number of our newer products, which may serve as our future business growth driver.”
“At the end of September, after carefully assessing the operating status of our polysilicon factory, we came to the conclusion that our efforts to reduce the production cost at the Phase I facility of the polysilicon factory were unsuccessful. We decided to permanently cease production at the Phase I facility in October 2013. As a result, we recognized a significant non-cash impairment charge for the third quarter. We believe the discontinuation of production at the Phase I facility will help reduce our polysilicon production cost, in line with our efforts to achieve a target cost level that would make our in-house polysilicon production cost-efficient compared to the prevailing market price of polysilicon. In addition, we believe the discontinuation will help reduce our power consumption and depreciation and therefore help to enhance our profitability going forward. While the solar sector remains highly competitive and subject to political uncertainties, we are confident our international approach to our module business and continuing investments in new technologies will support our longer-term goals,” said Mr. Li.
For the fourth quarter of 2013, the company expects total module shipments to be in the range of 490MW to 510MW, and expects overall gross margin to be in the range of 9% to 11%. For the full year 2013, the company expects total solar wafer and module shipments to be in the range of 3.0GW to 3.1GW, with solar module shipments expected to be in the range of 1.70GW to 1.75GW.
The company’s net revenues of $419.3 million are significantly higher than the estimate of $360.7 million. However, according to an article on The Motley Fool by Travis Hoium, the company’s net loss of $2.23 per ADS is far larger than the estimated loss of $0.22, which caused the shares to fall 20% yesterday when the company published its results.
“What worries me is that gross margin was only 8.1% last quarter, and management expects a 9%-11% margin for the fourth quarter. That’s well below the best in the industry and will keep me from buying today’s drop,” Hoium wrote.