Yingli Expects Slower Return to Profit as Shipments Surge

Yingli Green Energy Holding Co. Ltd. (YGE) tumbled to its lowest this year after executives pushed back guidance for when the world’s largest solar-panel maker will return to profit.

The manufacturer based in Baoding, China, said it won’t be profitable until the third quarter of this year, at least three months later than Chief Financial Officer Wang Yiyu predicted in January. Yingli also predicted its shipments will rise as much as 31 percent this year, driven in part by sales in its home market.

Yingli has pursued market share at the expense of profit, relying more on low-margin sales to Chinese customers than competitors, some of which have already recovered from a two-year slump in margins and prices. Yingli fell 8.3 percent to the lowest price this year.

“You can’t count on the elephant to run fast,” Patrick Dai, an analyst at Macquarie Group in Hong Kong, said today in an interview. “I think the market has overestimated its profitability progress.”

The company also forecast its shipments would surge as much as 31 percent this year to 4 gigawatts to 4.2 gigawatts of solar panels. It sold a record 3.2 gigawatts in 2013, according to a a statement released today.

Global Demand

Global demand for solar panels is surging, helping peers including JinkoSolar Holding Co. and Canadian Solar Inc. shift into profitability last year.

Source: Rutgers University via Bloomberg

Solar panels manufactured by China's Yingli Green Energy Holding Co. convert sunlight into electricity on the Livingston Campus of Rutgers University in New Brunswick, New Jersey, U.S. Close

Solar panels manufactured by China's Yingli Green Energy Holding Co. convert sunlight... Read More

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Source: Rutgers University via Bloomberg

Solar panels manufactured by China's Yingli Green Energy Holding Co. convert sunlight into electricity on the Livingston Campus of Rutgers University in New Brunswick, New Jersey, U.S.

Wang said during a conference call with analysts that Yingli will start to reach break-even in the second quarter and will then make a profit in the following quarter.

The delay sent Yingli’s American depositary receipts down to $5.41 at the close in New York. Each ADR is worth one ordinary share.

The net loss narrowed 38 percent in the fourth quarter to 776.2 million yuan ($128.2 million), or 82 cents an ADR. That’s more than quadruple the 18.4-cent loss expected by analysts, the average of five estimates compiled by Bloomberg.

Revenue rose 28 percent to 3.71 billion yuan. The average price for panels was “slightly below” 65 cents, Wang said.

Shipments to China, where prices are lower than the U.S., Japan and Europe, increased more than 60 percent from a year earlier and made up about 53 percent of total shipments in the quarter. Pricing will be slightly higher this year as China’s share of the total declines to about 29 percent, Wang said.

Yingli’s non-polysilicon costs were 42 cents a watt, down 12.5 percent from a year earlier, and polysilicon costs dropped to 9 cents from 15 cents.

The company is expanding its efforts to build solar farms and completed 128 megawatts in projects last year. It expects to complete construction of 400 megawatts to 600 megawatts of projects in China in 2014.

To contact the reporters on this story: Marc Roca in London at mroca6@bloomberg.net; Ehren Goossens in New York at egoossens1@bloomberg.net

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

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