Solar manufacturers are returning
to profit as demand in China soaks up a supply glut that gutted
margins for more than two years.
The largest solar-panel maker Yingli Green Energy Holdings
Co. (YGE) said yesterday that it expects to be profitable in the third
quarter. It joins peers including JinkoSolar Holding Co., Trina
Solar Ltd. (TSL) and JA Solar Holdings Co. in guiding investors to
expect both income and higher shipments in 2014.
Climbing demand for solar panels is countering a global
oversupply of production capacity that erased profits across the
industry and bankrupted more than a dozen companies. Developers
installed 37.5 gigawatts of panels worldwide last year, up 22
percent from 2012, and that figure may increase as much as 39
percent this year, according to data compiled by Bloomberg.
That growth is starting to “sponge up” much of the glut,
especially among Chinese manufacturers, that resulted from a
buildup in the late 2000s, Pavel Molchanov, an analyst at
Raymond James Associates Inc. in Houston, said in an
interview. “That has made a real dent in the overcapacity.”
China, which surpassed Germany to become the biggest solar
market last year, may install more than 14 gigawatts this year,
aiding domestic producers. The Asian nation added a record 12
gigawatts of solar power in 2013, compared with 3.6 gigawatts a
year ago, according to data from Bloomberg New Energy Finance.
“Demand has moved up toward capacity,” Molchanov said.
“The glut has gotten better.”
Yingli’s shipments increased 41 percent last year to 3.2
gigawatts, and the company said that may grow as much as 31
percent in 2014. Its net loss narrowed 38 percent in the fourth
quarter to 776.2 million yuan ($128.2 million), and Chief
Financial Officer Wang Yiyu said the company will break even in
the second quarter and be profitable in the third.
The company chose to gain market share at the expense of
profits, Patrick Dai, an analyst at Macquarie Group in Hong
Kong, said yesterday in an interview. While that puts it behind
smaller rivals, it will eventually catch up.
“You can’t count on the elephant to run fast from step
one,” Dai said. “I think the market has overestimated its
JA Solar posted net income of 142.3 million yuan in the
fourth quarter, its first profit since the first quarter of
2011. Shipments for the year increased 22 percent to 2.1
gigawatts, and may reach 2.9 gigawatts this year, the company
said March 17.
JinkoSolar became the first Chinese solar manufacturer to
shift back to profits, in the second quarter of last year. The
company reported net income of 164.3 million yuan in the fourth
quarter and is expanding production capacity. Shipments of 1.9
gigawatts beat its forecast by 10.5 percent and were almost 63
percent higher than in 2012. It expects 2014 deliveries of as
much as 2.5 gigawatts.
The largest solar manufacturers have cut expenses and are
poised to take advantage of growth this year, said Nimal Vallipuram, an analyst at Gilford Securities Inc. in New York.
“They continue to do very well at reducing the costs and
their volume is going up very strongly,” he said. “Demand has
come back with a vengeance.”
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Will Wade, Iain Wilson