Trina Solar Announced Its Financial Results for The Third Quarter of 2011

Trina Solar, a China-based integrated manufacturer of solar photovoltaic (PV) products from the production of ingots, wafers and cells to the assembly of PV modules, has announced its financial results for the third quarter of 2011. Net Revenues Net revenues in the third quarter of 2011 were US$481.9 million, a decrease of 16.8% sequentially and 5.2% year-over-year. Total shipments were 370.1MW, compared to 396.4MW in the second quarter of 2011 and 290.5MW in the third quarter of 2010. The sequential decrease in total shipments was primarily due to a reduction in available project financing for some customers' European projects and the Trina Solar's increased customer credit risk management. Gross Profit and Margin Gross profit in the third quarter of 2011 was US$52.0 million, compared to US$98.3 million in the second quarter of 2011 and US$159.4 million in the third quarter of 2010. Gross margin was 10.8% in the third quarter of 2011 which includes a non-cash inventory write down of US$19.1 million, compared to 17.0% in the second quarter of 2011 and 31.4% in the third quarter of 2010. Gross margin relating to Trina Solar's in-house wafer production to module production was 18.3% in the third quarter of 2011, compared to 20.4% in the second quarter of 2011 and 37.6% in the third quarter of 2010. The sequential reduction was primarily due to the decline in average module selling price exceeded Trina Solar's decline in manufacturing costs. Inventory Write down Trina Solar made a non-cash inventory write down in the third quarter of US$19.1 million based on the revaluation of its inventory as a result of notable market price declines of raw materials, work-in-progress and finished goods in the quarter. Operating Expense, Income and Margin Operating expenses in the third quarter of 2011 were US$75.5 million, an increase of 15.3% sequentially and an increase of 62.6% on year. Trina Solar's operating expenses represented 15.7% of its third quarter net revenues, an increase from 11.3% in the second quarter of 2011 and an increase from 9.1% in the third quarter of 2010. The sequential percentage increase was primarily due to accounts receivable provision of US$10.3 million combined with a decrease in net revenues. The year-to-year percentage increase was primarily due to the continued expansion of Trina Solar's global management structure to meet its strategic growth objectives and increased investment in research and development initiatives, partially offset by expense control measures implemented starting from 2010. Operating expenses in the third quarter of 2011 also included US$2.0 million in share-based compensation expenses, compared to US$2.3 million in the second quarter of 2011 and US$1.4 million in the third quarter of 2010. As a result of the foregoing, loss from operations in the third quarter of 2011 was US$23.5 million, compared to operating income of US$32.8 million in the second quarter of 2011 and US$113.0 million in the third quarter of 2010. Operating margin was negative 4.9% in the third quarter of 2011, compared to 5.7% in the second quarter of 2011 and 22.2% in the third quarter of 2010. Net Income and EPS Net loss was US$31.5 million in the third quarter of 2011, a decrease from net income of US$11.8 million in the second quarter of 2011 and US$82.9 million in the third quarter of 2010. Net foreign currency exchange gain included in net loss was US$0.4 million in the third quarter of 2011, compared to a net foreign currency exchange loss of US$10.8 million in the second quarter of 2011 and US$8.3 million in the third quarter of 2010. Net margin was negative 6.5% in the third quarter of 2011, compared to 2.0% in the second quarter of 2011 and 16.3% in the third quarter of 2010. Earnings per fully diluted ADS were negative US$0.45 in the third quarter of 2011. The effects of the third quarter foreign currency exchange net gain were approximately US$0.01 per fully diluted ADS. Fourth Quarter and Fiscal Year 2011 Guidance For the fourth quarter of 2011, Trina Solar expects to ship between 320-350MW of PV modules. Trina Solar believes its overall gross margin, taking into account wafer and cell requirements outsourced to third party suppliers to meet demand in excess of its internal capacity, for the fourth quarter will be approximately 10%. Such guidance is based on the exchange rate between the Euro and US dollar as of November 21, 2011. Based on its demand outlook for the fourth quarter of 2011, Trina Solar has revised its outlook for the full year 2011 PV module shipment to approximately 1.4GW, representing an increase of approximately 32.5% from 2010, compared to Trina Solar's previous guidance of between 1.75-1.8GW. 2011 and 2012 Manufacturing Capacity As of September 30, 2011, Trina Solar's annualized in-house ingot and wafer production capacity was approximately 1.2GW and its PV cell and module production capacity was approximately 1.9GW. Trina Solar expects to increase its in-house PV cell and module production capacity by up to approximately 500MW, to a total of 2.4GW by the end of the first half of 2012. "We experienced a challenging third quarter as a result of significant price declines and tightened financing conditions, which affected some of our customers' large European projects," said Jifan Gao, chairman and CEO of Trina Solar. "During the third quarter, we paid increasing attention to customer credit risks and in some cases regulatory risks linked to the underlying project markets, which resulted in our foregoing some sales opportunities. We also continued to maintain a strong balance sheet during this quarter." "To best position Trina Solar going forward, we are refining our marketing and product strategies to address larger and more diversified distribution channels, in both established and emerging solar markets. These include the growing US residential leasing channel, where we recently signed a 60MW supply agreement in the fourth quarter." "As we focus on growth, the recent establishment of our Asia Pacific regional headquarters in Singapore will help us secure new customers in the Asia Pacific region, the Middle East and South Africa. In markets such as Australia and Southern Europe, as grid parity approaches, we believe that long-term success will ultimately depend on the effective delivery of innovative solutions based on efficient manufacturing and customer-driven value-added support services." Source: www.digitimes.com