Yingli Green Energy Holding Co. (YGE:US), the Chinese company that may become the biggest solar manufacturer, said shipments of panels surged at more than double its expected pace in the fourth quarter as prices fell.
Yingli expects fourth-quarter shipments to increase 40 percent from the third quarter, compared with an earlier forecast of a “low teen” gain, the Baoding, China-based company said in a statement today.
Solar manufacturers are contending with prices that slumped 12 percent in the fourth quarter. That’s driving up sales while cutting into margins and eroding profits, according to Aaron Chew, an analyst at Maxim Group LLC in New York.
“The only reason we’re seeing demand upside is because of lower pricing,” Chew said in an interview. “Demand upside means nothing if it doesn’t yield higher prices and thus margins.”
Chew rates Yingli a hold and said he expects “little upside until profitability outlook improves.”
Yingli’s shipments for the year will be about 2.3 gigawatts, according to the statement. That puts it on track to surpass Suntech Power Holdings Co., the top panel producer in 2011, which lowered its 2012 shipment forecast (STP:US) in August to 1.8 gigawatts to 2 gigawatts.
Yingli also will take a charge in the quarter to write down inventory, contributing to gross margin of minus 8 percent to minus 8.5 percent, according to the statement. Its margin was minus 23 percent in the third quarter, the first time it reported a negative margin since the company was listed on the New York Stock Exchange in 2007.
Yingli Chief Financial Officer Bryan Li said last month gross margin may rise to 20 percent this year if market conditions improve.
JA Solar Holdings Co. (JASO:US) said Feb. 20 that shipments in the fourth quarter will be 480 megawatts to 500 megawatts, up from its prior forecast of 380 megawatts to 420 megawatts. The Shanghai-based company didn’t forecast its margin for the quarter.
Yingli is scheduled to report fourth-quarter and full-year 2012 results on March 4. JA Solar hasn’t set a date for its earnings report.
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