Chinese solar manufacturers Trina Solar Ltd. (TSL:US) and JinkoSolar Holding Co. (JKS:US) reported lower third- quarter revenue as panel prices continued to drop, an “irrational” pattern that Trina is taking steps to curtail.
Both companies reduced prices in the quarter and Trina Chief Financial Officer Terry Wang said he won’t go lower to chase market share even with the Changzhou, China-based company’s factories running at half-speed.
Overcapacity and a global supply glut have driven down prices 21 percent in the past year, leading to losses at almost every manufacturer. Trina’s efforts to impose a floor on solar- panel prices may prompt rivals to follow suit, potentially steering the industry back toward profitability, said Mark Bachman, an analyst at Avian Securities Inc. in Boston.
“It’s the first hint of rational behavior we’ve seen from a Chinese manufacturer,” Bachman said today in a telephone interview. “We could see more manufacturers wake up and follow Trina’s lead.”
Trina’s sales were $298 million, down 38 percent from a year earlier, according to a statement today. Solar-panel shipments fell 9.2 percent from the prior quarter to 380 megawatts as the company opted to focus on profitable contracts. Shipments in the current quarter will be unchanged or will increase as much as 5.2 percent to 400 megawatts.
“We see profitability as number one and the focus for now,” Wang said during a conference call today. “Market share is going to be secondary.” As a result, the company’s factories are running at about 50 percent of capacity.
Trina’s panel price declined sequentially and the company didn’t give the figure. That was due in part to “the irrational pricing practices by some competitors,” Chief Executive Officer Gao Jifan said in the statement.
There are signs that the industry may have reached a temporary bottom. Panel prices averaged 79 cents a watt on Nov. 5, according to Bloomberg New Energy Finance, up from 67 cents on Sept. 24, the lowest since the London-based research company began tracking the market in November 2010.
Jinko’s price in the third quarter was 68 cents a watt, Chief Financial Officer Zhang Longgen said during a conference call today. The company said in September its price in the second quarter was 74 cents a watt.
The company continues to focus on sales over profits, Bachman said, as are many of it peers. Other Chinese manufacturers, “they’re all still chasing market share,” he said.
Jinko, based in Jiangxi, China, shipped 280 megawatts of panels in the quarter, up 28 percent from a year earlier, while revenue fell 22 percent to 1.39 billion yuan ($223 million), according to a statement today. It reported a net loss of 54.8 million yuan, compared with net income of 68.1 million yuan. Shipments in the current quarter will be 250 megawatts to 300 megawatts.
The company’s gross margin was 9.9 percent, up from 3.7 percent a year earlier.
“JinkoSolar’s still producing pretty good margins and that shows they’re doing something right,” Bachman said. “They got in later than a lot of their peers so they’ve got newer, more efficient equipment.”
Jinko’s American depositary receipts, each worth four ordinary shares, increased 1.1 percent to $3.55 at the close in New York. Trina’s ADRs, worth 50 shares, fell 8.8 percent to $2.19.
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