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Yingly Green posts year-over-year Q1 growth, but shares fall on lower margins, demand

Published: 11:18 20 May 2011 EDT

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Yingli Green Energy (NYSE:YGE) the solar photovoltaic (PV) manufacturer, reported Friday higher first quarter profit and revenue year-over-year, despite negative sequential growth in PV module shipments.

For the first three months of 2011, the China-based solar energy company reported a net income of RMB 368.3 million (US$56.2 million), up from RMB 190 (US$29 million) a year before.

On a per share basis, the company earned RMB 2.29, or US$0.35 per share, up from RMB 1.24, US$0.19 per share, during the same comparable period.

On an adjusted basis, earnings per share were RMB 2.51 (US$ 0.38), an increase of 57% from the first quarter of 2010.

Total revenue increased on a year-over-year basis to RMB 3.45 billion (US$527.3 million), up from RMB 2.45 billion (US$376.64 million) a year ago. However, sales fell from the fourth quarter due to a "sudden demand slowdown", leading to a decline in lower PV module shipments.

The company said the demand slowdown was due to bad weather in Germany, and policy change in Italy, where the government announced plans to reduce feed-in tariffs for solar power systems in its effort to slow down an over-saturated solar market.

The Italian government announced this change in early March, but the new policy did not take effect until this month, which led to uncertainties and delays in solar power projects.

However, despite the fall in shipments, Yingli Green said it expects to hit its full-year shipment target of between 1.7GW to 1.75 GW through optimized global sales strategies.

"In the US, we continued to win new customers and diversify our geographic mix. Our customer pool proved to be extensively diversified to drive demand for a record quarter with shipment of more than 50 MW, a five-fold increase from the first quarter of 2010," said chairman and CEO Mr. Liansheng Miao.

Yet, the company also posted gross margins of 27.3%, a steep fall from 33.3% a year before, reflecting an increase of outsourced cell production and in polysilicon spot price, as well as a slight decrease in average selling price.

On Friday, the company's shares were down by 9% trading at $9 as of 10:30 a.m. EST.

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