Trina reveals challenging financials
Trina Solar has announced its financial results for the first quarter of 2013. The company has seen a decrease on output and profits continue.
Solar module shipments were approximately 393 MW during the first quarter of 2013, representing a sequential decrease of 5.3% from the fourth quarter of 2012. Net revenues were $260.2 million, a decrease of 14.0% from the fourth quarter of 2012. Gross profit was $4.4 million, a decrease of 21.5% from the fourth quarter of 2012. Gross margin was 1.7%, compared to 1.9% in the fourth quarter of 2012. The Company had an accounts receivables provision reversal of $11.1 million in the first quarter of 2013
Operating loss was $40.1 million, compared to $70.4 million in the fourth quarter of 2012. Operating margin was negative 15.4%, compared to negative 23.3% in the fourth quarter of 2012. The Company had a foreign currency exchange loss of $19.0 million, net of changes in the fair value of derivative instruments.
Net loss was $63.7 million, compared to a net loss of $87.2 million in the fourth quarter of 2012 Loss per fully diluted American Depositary Share ("ADS" and each ADS represents 50 of the Company's ordinary shares) was $0.90, compared to $1.23 in the fourth quarter of 2012
"While the average selling price ("ASP") of modules continued to decline in the first quarter due to the lingering supply-demand imbalance in the global PV industry, the rate of decline has slowed from previous quarters," said Mr. Jifan Gao, chairman and CEO of Trina Solar. "In this environment, we continue to focus on improving operational efficiency and exercising financial discipline. In the first quarter, the reductions in non-silicon costs we achieved outweighed the fall in ASP, and we also collected a sizeable amount of overdue accounts receivables. These efforts enable us to maintain strong liquidity and a robust balance sheet, making us better positioned to capture future growth opportunities.
"As previously announced, we completed several restructuring and streamlining initiatives in the second half of 2012 and we saw sustained improvements in our general and administrative expenses in the first quarter of 2013. We will continue to strictly control operating costs while maintaining our product quality and service capabilities. In terms of revenues, we achieved strong sequential shipment growth in Japan and India, two of the most important emerging markets for the PV industry. In Europe we worked to retain quality customers and were also able to diversify our customer base. Trina Solar remains committed to continuing to serve our customers and business partners in Europe as the EU's preliminary determination on antidumping and countervailing duty tariffs against Chinese solar products approaches.
"At the beginning of the year, we announced that the Company had been awarded the right to develop a 50 MW solar project in Gansu province, China. We began construction on the project during the end of the first quarter and expect to connect the project to the power grid and begin limited production by the end of the third quarter of 2013. For our downstream systems business, we remain committed to focusing on R&D and delivering innovative products and solutions to lower installation costs, while enhancing the efficiencies and ease-of-use of solar energy."
Operating expenses in the first quarter of 2013 were $44.5 million, a decrease of 41.5% sequentially and a decrease of 26.0% year-over-year. The Company's operating expenses represented 17.1% of its first quarter net revenues, a decrease from 25.1% in the fourth quarter of 2012 and 17.2% in the first quarter of 2012. The sequential percentage decrease was primarily due to an accounts receivables provision reversal of $11.1 million during the first quarter of 2013 and expense control measures taken by the Company since the second half of 2012. Operating expenses in the first quarter of 2013 included $1.1 million in share-based compensation expenses, compared to $0.1 million in the fourth quarter of 2012 and $2.0 million in the first quarter of 2012.
As a result of the foregoing, operating loss in the first quarter of 2013 was $40.1 million, compared to operating losses of $70.4 million in the fourth quarter of 2012 and $39.9 million in the first quarter of 2012. Operating margin was negative 15.4% in the first quarter of 2013, compared to negative 23.3% in the fourth quarter of 2012 and negative 11.4% in the first quarter of 2012.
As of March 31, 2013, the Company had $822.3 million in cash and cash equivalents and restricted cash, and a working capital balance of $238.5 million. Total bank borrowings were $1,226.4 million, of which $395.5 million were long-term borrowings. The Company decreased its short-term borrowings by $45.0 million to approximately $830.8 million as of March 31, 2013.
At the end of the first quarter of 2013, $83.6 million of the Company's convertible senior notes due July 2013 remained outstanding, which remained unchanged from the fourth quarter of 2012.
In the first quarter of 2013, the Company continued its efforts to reduce manufacturing costs, achieving a reduction of high single digit in percentage terms from a quarter ago. The sequential decrease in non-silicon manufacturing costs were primarily due to improved supply chain cost control, increased utilization of the Company's in-house manufacturing capacities, as well as increases in the Company's module efficiencies and improvements in its manufacturing processes.
As a result of increased average poly-silicon spot prices in the first quarter of 2013 compared to the fourth quarter of 2012, the Company experienced a sequential increase in silicon costs in its module manufacturing business. Through its diversified range of short, medium and long-term supply agreements, the Company will continue to maintain competitive silicon costs relative to current market prices.
As of March 31, 2013, the Company's annualized in-house ingot and wafer production capacity remained approximately 1.2 GW and its PV cell and module production capacity remained approximately 2.4 GW.
