Yingli Green Energy Holding Company Limited, the world's vertically integrated photovoltaic manufacturer, which markets its products under the brand "Yingli Solar", announced on August 30th its unaudited consolidated financial results for the quarter ended June 30, 2013.
Second Quarter 2013 Consolidated Financial and Operating Summary
• Total net revenues were RMB 3,378.3 million (US$550.4 million).
• PV module shipments increased by 23.6% from the first quarter of 2013.
• Overall gross profit was RMB 397.5 million (US$64.8 million), representing a gross margin of 11.8%. Gross margin for PV modules was 12.5%.
• Operating loss was RMB 129.2 million (US$21.1 million), representing an operating margin of negative 3.8%.
• Net loss[1] was RMB 320.8 million (US$52.3 million) and loss per ordinary share and per
American depositary share ("ADS") was RMB 2.05 (US$0.33). On an adjusted non-GAAP[2] basis, net loss was RMB 321.5 million (US$52.4 million) and loss per ordinary share and per ADS was RMB 2.05 (US$0.33).
[1] For convenience purposes, all references to "net loss/income" in this press release, unless otherwise specified, represent "net loss/income attributable to Yingli Green Energy" for all periods presented.
[2] All non-GAAP measures exclude, as applicable, share-based compensation, interest expenses consisting of changes in the fair value of the interest rate swap and the amortization of the debt discount, the amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Baoding Tianwei Yingli New Energy Resources Co., Ltd. ("Tianwei Yingli"), an operating subsidiary of the Company. For further details on non-GAAP measures, please refer to the reconciliation table and a detailed discussion of the Company's use of non-GAAP information set forth elsewhere in this press release.
Second Quarter 2013 Financial Results
Total Net Revenues
Total net revenues were RMB 3,378.3 million (US$550.4 million) in the second quarter of 2013, an increase of 26.1% from RMB 2,679.3 million in the first quarter of 2013 and up from RMB 3,103.5 million in the second quarter of 2012. PV module shipments in the second quarter of 2013 increased by 23.6% from the first quarter of 2013. The significant sequential increase in net revenues from the first quarter of 2013 was mainly due to the increased PV module shipments and the slightly improved average selling price of PV modules in this quarter.
Gross Profit and Gross Margin
Gross profit was RMB 397.5 million (US$64.8 million) in the second quarter of 2013, a significant increase of 258.5% from RMB 110.9 million in the first quarter of 2013 and up from RMB 141.5 million in the second quarter of 2012.
Overall gross margin was 11.8% in the second quarter of 2013, which improved from 4.1% in the first quarter of 2013 and 4.6% in the second quarter of 2012.The sequential increase in gross margin in the second quarter of 2013 was primarily attributable to the slightly improved average selling price of PV modules in this quarter and the Company's continuous efforts in reducing manufacturing cost.
Operating Expenses
Operating expenses were RMB 526.7 million (US$85.8 million) in the second quarter of 2013, compared to RMB 435.6 million in the first quarter of 2013 and RMB 468.2 million in the second quarter of 2012. The increase in operating expenses was mainly a result of increased selling expenses in line with the Company's increased PV modules shipment volume in this quarter.
Operating expenses as a percentage of total net revenues was 15.6% in the second quarter of 2013, compared to 16.3% in the first quarter of 2013 and 15.1% in the second quarter of 2012.
Operating Loss and Margin
Operating loss was RMB 129.2 million (US$21.1 million) in the second quarter of 2013, a significant decrease from RMB 324.7 million in the first quarter of 2013 and RMB 326.7 million in the second quarter of 2012.
Operating margin was negative 3.8% in the second quarter of 2013, compared to negative 12.1% in the first quarter of 2013 and negative 10.5% in the second quarter of 2012.
Interest Expense
Interest expense was RMB 224.9 million (US$36.6 million) in the second quarter of 2013, compared to RMB 221.9 million in the first quarter of 2013 and RMB 229.3 million in the second quarter of 2012. As of June 30, 2013, the Company had an aggregate of RMB 17.2 billion (US$2.8 billion) of bank borrowings and medium-term notes, compared to RMB 15.5 billion as of March 31, 2013. The weighted average interest rate of the Company's borrowings was 6.20% in the second quarter of 2013, which decreased from 6.34% in the first quarter of 2013. The slight increase in interest expense was mainly due to increased bank borrowings, and partially offset by the Company's efforts in optimizing its debt structure.
Foreign Currency Exchange Gain (Loss)
Foreign currency exchange gain was RMB 6.5 million (US$1.1 million) in the second quarter of 2013, compared to foreign currency exchange loss of RMB 92.4 million in the first quarter of 2013 and RMB 183.7 million in the second quarter of 2012. Given that the Company had a net USD-denominated liability position, the foreign currency exchange gain was mainly due to the appreciation of the RMB against the USD in this quarter.
Income Tax Benefit (Expense)
Income tax benefit was RMB 4.2 million (US$0.7 million) in the second quarter of 2013, compared to income tax expense of RMB 9.8 million in the first quarter of 2013 and income tax benefit of RMB 102.3 million in the second quarter of 2012.
Net Loss
Net loss was RMB 320.8 million (US$52.3 million) in the second quarter of 2013, compared to RMB 611.8 million in the first quarter of 2013 and RMB 573.0 million in the second quarter of 2012. Loss per ordinary share and per ADS was RMB 2.05 (US$0.33) in the second quarter of 2013, compared to RMB 3.91 in the first quarter of 2013 and RMB 3.66 in the second quarter of 2012.
On an adjusted non-GAAP basis, net loss was RMB 321.5 million (US$52.4 million) in the second quarter of 2013, compared to RMB 607.1 million in the first quarter of 2013 and RMB 551.2 million in the second quarter of 2012. Adjusted non-GAAP loss per ordinary share and per ADS was RMB 2.05 (US$0.33) in the second quarter of 2013, compared to RMB 3.88 in the first quarter of 2013 and RMB 3.52 in the second quarter of 2012.
Balance Sheet Analysis
As of June 30, 2013, the Company had RMB 3,627.4 million (US$591.0 million) in cash and restricted cash, an increase from RMB 2,821.3 million as of March 31, 2013.
As of June 30, 2013, accounts receivable were RMB 4,435.2 million (US$722.6 million), compared to RMB 4,174.6 million as of March 31, 2013. Days sales outstanding was 118 days in the second quarter of 2013, which improved from 140 days in the first quarter of 2013.
As of June 30, 2013, accounts payable were RMB 4,708.0 million (US$767.1 million), compared to RMB 4,591.1 million as of March 31, 2013. Days payable outstanding was 142 days in the second quarter of 2013, compared to 161 days in the first quarter of 2013.
As of June 30, 2013, inventories were RMB 3,095.2 million (US$504.3 million), compared to RMB 2,893.4 million as of March 31, 2013. Inventory turnover days was 93 days in the second quarter of 2013, compared to 101 days in the first quarter of 2013.
As of the date of this press release, the Company had approximately RMB 5,270.6 million in unutilized short-term lines of credit and RMB 1,567.0 million committed long-term facility that can be drawn down in the near future.
Business Outlook for Full Year 2013
Based on current market and operating conditions, estimated production capacity and forecasted customer demand, the Company reiterates its PV module shipment target to be in the estimated range of 3.2 GW to 3.3 GW for fiscal year 2013, which represents an increase of 39.4% to 43.7% compared to fiscal year 2012.
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with GAAP, this press release includes certain non-GAAP financial measures of adjusted net income (loss) and adjusted diluted earnings (loss) per ordinary share and per ADS, each of which is adjusted to exclude, as applicable, items related to share-based compensation, interest expense consisting of changes in the fair value of the interest-rate swap and the amortization of the debt discount, the amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Tianwei Yingli. The Company believes excluding these items from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's on-going performance as such items are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial information included elsewhere in this press release.
Currency Conversion
Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB 6.1374 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board as of June 30, 2013. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollar amounts at such rate, or at any other rate. The percentages stated in this press release are calculated based on Renminbi.
