Yingli Expects Gross Margin to Rise to 20% Should Prices Recover

Yingli Green Energy Holding Co. (YGE), the world’s biggest silicon-based solar panel maker by capacity, expects gross margin to rise to as much as 20 percent this year if module prices rebound and production costs drop.

“Our production costs will decline considerably as new materials and technology are used, economy of scale intensifies and conversion efficiency rises,” Bryan Li, chief financial officer, said yesterday in an interview from Baoding, China, where the company is based. “Module prices have been steady for some time and will return to a more rational level.”

The comments reflect growing optimism among solar manufacturers in China following a 61 percent plunge in panel prices in the past two years because of oversupply. The 17- member Bloomberg Global Large Solar Energy Index (BISOLAR), which includes Yingli, has gained 21 percent this year compared with a loss of 26 percent last year.

Solar manufacturers have been contending with a global glut that’s driving down prices and cutting into margins as governments from Europe to the U.S. reduce support. Photovoltaic panel prices have begun to recovery slightly, rising 6 percent since the end of December, according to Bloomberg New Energy Finance.

Yingli in November reported gross margin was negative in the third quarter for the first time since listing on the New York stock exchange in 2007, coming in at minus 23 percent because of falling prices and lower sales in Germany. Current gross margin is in “single digits,’ Li said.

Shipments Increasing

Yingli’s target ‘‘is very optimistic but possible,” Wang Xiaoting, a Beijing-based analyst at Bloomberg New Energy Finance, said. “Module prices are at bottom and very likely to rebound and the average cost will fall as shipments rise.”

Yingli will increase shipments by at least 50 percent this year compared with 2012 when it shipped more than 2.2 gigawatts, Li said. The world will add no less than 35 gigawatts of solar- power installations in 2013, increasing from an estimated 30 gigawatts in the previous year, he forecast.

The market in China, which will account for about a third of Yingli’s panels this year, will increase the fastest amid the nation’s plans to more than double installations in 2013, Li said. More growth will also come in markets such as the U.K. and Romania while Germany and Italy slow, he said.

To contact the reporter on this story: Feifei Shen in Beijing at fshen11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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