China's solar industry: a fine state of affairs

So while revenues unexpectedly rose USD244.7 million to USD3,146.6 million in 2011 as shipments increased, again the decline in average selling prices hit the bottom line. Profitability was also hit by a USD91.9 million write-off of the unamortized cost of warrants previously issued to MEMC as part of wafer supply agreements.

After rapidly expanding, it is reducing its capex to about USD150 million from USD366.8 million in 2011. 

However Suntech's publicized plans for market development seem relatively pedestrian, concentrating on the European and US markets. Some analysts see the company as needing even more cash injections to maintain sustainable earnings, with debt increasing to USD3.584 billion and seen as increasingly unmanageable.

Yingli, February 29

The extra day in the year didn't help the solar company boost revenues or profits. Away from gross profits, as commonly quoted by the industry, a closer look shows net losses of CNY3,208.9 million (USD509.8 million) for 2011 compared to a profit of  USD219.7 million in 2010. Gross profits show a paper profit of USD389.2 million for the year.

While shipments of product increased by 51.1 percent over 2010, its operating margins fell to 6.7 percent. However this takes into account a non-cash inventory provision and some unusual charges and write-downs: USD361 million impairment of assets and USD43 million in goodwill for its Fine Silicon in-house polysilicon unit, and a USD135 million provision for inventory purchases under long-term polysilicon supply contracts, which it is trying to renegotiate.

Some of these issues create concern among analysts as bad planning, while others argue taking the hit now of nearly USD500 million in polysilicon charges will remove supply problems going into 2012, and there have been moves to diversify the supply chain.

But the company made confident noises about the coming year and expected an increase in shipments of between 49.6 to 55.9 percent. It is reserved on Europe, expecting continuing problems in a market that contributes 60 percent of Yingli's revenues, and has worries about future US tariff rises. Unlike some of its competitors, however, Yingli is more open on pinning its hopes on capturing business in the China market and made some progress during 2011 with 22 percent of its revenues coming domestically, up from a paltry 6 percent in 2010.

Liabilities excluding equity came to USD3.24 billion.