SECOND QUARTER 2013 RESULTS
•Total net revenues were RMB1,182.8 million (US$192.7 million), an increase of 6.3% from RMB1,112.9 million in 1Q13, and an increase of 10.4% from RMB1,071.7 million in 2Q12. The increase in total net revenues in 2Q13 compared with 1Q13 was primarily due to higher shipments, lower costs and stable ASP.
•PV module shipments, including module processing services, were 321.2 MW, an increase from 289.1 MW in 1Q13, and an increase from 230.7 MW in 2Q12.
Module revenue by shipping destination Q2 13
Module revenue by shipping destination Q1 13
•Module shipments to Japan, a market that values quality and brand, remained stable at 34% in 2Q13 at a good pricing level. Shipments to South Africa continued this quarter, representing 20% of revenues. The German market remained solid for the Company and made up 12% of total module shipments in 2Q13.The US (7%), China (4%) and the UK (3%) continued to be a mainstay of the Company's dispersion of shipments. Korea came to the forefront this quarter as a notable new market for the Company accounting for 5% of shipments in 2Q13. The Company continues to actively diversify its business outside the EU in order to minimize the risk from the ongoing trade dispute with the region; therefore shipments to Europe declined to 26% of total shipments. The Company shipped PV modules to 29 countries during 2Q13, further diversifying the geographic spread. Shipments to Europe and Africa (EA) contributed 46% to total module shipments, Asian Pacific (AP) accounted for 46% and North America (NA) 8%.
•Average selling price ("ASP"), excluding module processing services, decreased to RMB4.03 per watt (US$0.66) from RMB4.12 per watt in 1Q13 and from RMB4.85 per watt in 2Q12.
•Gross profit for 2Q13 was RMB65.3 million (US$10.6 million), compared with a gross profit of RMB28.9 million in 1Q13 and a gross profit of RMB67.5 million in 2Q12.
•Gross margin was positive 5.5%, compared with positive 2.6% in 1Q13. The improvement in gross margin was primarily due to stable ASP, lower cost, higher revenues and decreased idle capacity loss. Gross margin in 2Q12 was positive 6.3%.
•The blended cost of goods sold ("COGS") per watt, excluding module processing services, was US$0.62, representing a 4.6% decrease from US$0.65 in 1Q13, which excluded non-cash charges. The blended COGS takes into account the production cost (silicon and non-silicon) using internally sourced wafers, purchase costs and additional processing costs of externally sourced wafers and cells.
•Operating loss of 2Q13 was RMB122.1 million (US$19.9 million), compared with an operating loss of RMB128.2 million in 1Q13 and an operating loss of RMB82.8 million in 2Q12. Operating margin increased to negative 10.3% from negative 11.5% in 1Q13, compared to negative 7.7% in 2Q12.
•Operating expenses as a percentage of total net revenues were 15.8% in 2Q13, compared with 14.1% in 1Q13 and 14.0% in 2Q12. The increase in operating expenses is primarily due to an increase in sales commission and freight, which is a reflection of the increase in shipments this quarter.
•Interest expense was RMB73.3 million (US$11.9 million), compared with RMB75.8 million in 1Q13 and RMB76.6 million in 2Q12.
•The Company recorded a net gain of RMB47.2 million (US$7.7 million), which included a foreign exchange gain and a gain from the change in fair value of derivatives in hedging activities. The Company recorded a net loss of RMB23.8 million in 1Q13 and a net loss of RMB34.3 million in 2Q12 for the foreign exchange loss and the gain from change in fair value of derivatives in hedging activities.
•Loss from the change in fair value of the conversion feature of the Company's convertible bonds was RMB11.2 million (US$1.8 million), compared with a gain of RMB2.1 million in 1Q13 and a gain of RMB1.2 million in 2Q12. The fluctuations were primarily due to changes in the Company's ADS price during the quarter. This line item has fluctuated, and is expected to continue to fluctuate quarter-to-quarter. The Company has no direct control over the fluctuations.
•Income tax expense in 2Q13 was RMB3.1 million (US$0.5 million), compared with an income tax expense of RMB0.5 million in 1Q13 and RMB77.8 million in 2Q12.
•Net loss attributable to shareholders on a non-GAAP basis1 was RMB130.0 million (US$21.2 million), compared with a net loss attributable to shareholders of RMB202.9 million in 1Q13 and a net loss attributable to shareholders of RMB245.9 million in 2Q12.
•Net loss per basic ADS on a non-GAAP basis was RMB1.54 (US$0.25), compared with net loss per basic ADS on a non-GAAP basis of RMB2.40 in 1Q13 and net loss per basic ADS on a non-GAAP basis of RMB2.91 in 2Q12.
•Net loss attributable to shareholders on a GAAP basis was RMB166.0 million (US$27.0 million), compared with net loss attributable to shareholders of RMB225.9 million in 1Q13 and net loss attributable to shareholders of RMB266.7 million in 2Q12.
•Net loss per basic ADS on a GAAP basis was RMB1.96 (US$0.32), compared with net loss per basic ADS of RMB2.67 in 1Q13 and net loss per basic ADS of RMB3.16 in 2Q12.
•Annualized ROE on a non-GAAP basis was negative 25.1% in 2Q13, compared with negative 36.2% in 1Q12 and negative 28.8% in 2Q12.
•Annualized ROE on a GAAP basis was negative 27.2% in 2Q13, compared with negative 34.3% in 1Q13 and negative 27.6% in 2Q12.