Shaky European markets sting China PV suppliers

The stalled European PV market is having a noticeable effect on China's large solar producers with at least two, Yingli Green and China Sunergy, reporting disappointing results for the first quarter of 2011.

Yingli Green's module shipments decreased by a low teen percentage from Q4 2010 with revenue reported for Q1 2011 at USD527.3 million, compared to USD616.1 million in Q4 2010. Gross profit was USD144.1 million, representing a gross margin of 27.3 percent and an operating margin of 16.5 percent.

For China Sunergy, having now completed its shift from cell producer to module producer, first-quarter results were in line with the fourth quarter of 2010, except in relation to higher inventory and falling module prices.

Net income crashed 77.3 percent to USD3.5 million compared to the previous quarter net income of USD15.4 million. Revenue increased to USD165.7 million, a 58.9 percent increase year-on-year over Q1 2010 but a slight decrease of 2.3 percent over the fourth quarter of 2010.

Yingli noted that the decrease in gross margin quarter-over-quarter was primarily due to the increase of outsourced cell production and polysilicon spot prices, as well as a slight decrease in average selling prices.

Both companies are optimistic shipments will improve in Q2.

"In the first quarter of 2011, we experienced a sudden demand slowdown in Europe, primarily due to the uncertainties relating to the feed-in-tariff policy change in Italy and the severe winter season conditions in Germany," commented Liansheng Miao, chairman and chief executive officer of Yingli Green Energy. "However, despite a lower-than-expected shipment in the past quarter, we remain confident to accomplish our full-year shipment guidance of 1.7 to 1.75 GW through continuously optimized global sales strategies."

Sunenergy noted that revenues were held back primarily by uncertainty over feed-in tariffs in Italy and winter weather installation difficulties in other European markets. Inventories at the end of the first quarter reached US$124.1 million, a 71.6% increase over the end of 2010.

"We take a long-term view of the industry. Although European demand was soft in the first quarter, there are many untapped and developing markets abroad, not to mention China's eventual emergence as an end market," commented Stephen Cai, CEO of China Sunergy.