Yingli Sees Slower Solar Shipments After It Exceeds Forecast
(Bloomberg) -- Yingli Green Energy Holding Co. expects solar panel shipments to slow in the third quarter after demand from its biggest market in China held firm in the previous three months, helping it exceed guidance.
The Chinese manufacturer of photovoltaic panels forecast deliveries of 300 to 400 megawatts in the quarter ending on Sept. 30, down from 662 megawatts in the second quarter, according to a statement Tuesday. The latest reading was above its previous outlook for 580 megawatts to 620 megawatts.
Locked in talks with lenders after defaulting on a series of loans, Yingli is continuing to recover from four years of losses that finished in the first quarter of this year. Chairman and founder Liansheng Miao vowed to redouble cost-cutting to weather stiffer competition and falling panel prices expected in the remainder of the year.
“We expect to face various challenges, such as the downward trend of average selling price of PV module as a result of increasing competition in various markets and higher anti-dumping and countervailing duty tariff in U.S.,” Miao said in the statement. Yingli will “make every effort to reduce production cost, control operating expenses, and adjust our marketing strategies,” he said.
The company also expects its margins to narrow in the third quarter to 12.5 percent to 14 percent, down from 18.2 percent in the second quarter.
It had net income of 71.8 million yuan ($10.8 million) in the latest period compared with a loss of 598 million yuan a year ago. Revenue fell to 2.52 billion yuan from 2.72 billion yuan. Second-quarter results were boosted by a 27 million-yuan foreign currency gain, reversing a loss of 10.3 million yuan during the same period in 2015.
Once the world’s biggest solar panel maker, Yingli was surpassed by Trina Solar Ltd. in 2014 after a global panel glut slashed margins across the industry and sent the PV costs plunging. The company reported its first profit in June thanks to growing demand from Japan, extending it to the last three months.
Yingli was part of a wave of Chinese companies that flooded the market with low-cost equipment and sent down the price of photovoltaics over 60 percent in the last five years.
“Manufacturers are aware of the oversupply but they keep expanding capacity to be cost competitive with the latest technology, and to reap benefits of scale,” said Yali Jiang and Xiaoting Wang, analysts at Bloomberg New Energy Finance in a research note.
Yingli said it’s continuing to talk to debt holders about restructuring overdue payments. It has successfully renewed or extended over half of its loans from major lending banks and reduced some of its interest rates.
Yingli breached its debt covenants for more than a year and has been kept alive by state-backed institutions led by the China Development Bank and Bank of Communications Co.
After one of its major subsidiaries missed payments on 1.76 billion yuan of debt in May, the company reached an agreement with some note holders in June that extended the repayment deadline to March 2017.
Owners of more than half of the notes issued in 2010 and 2011 agreed to the 10-month deadline extension with a number of conditions, including that Yingli itself guarantee the debt.