JA Solar Holdings Co., Ltd. today announced its unaudited financial results for its second quarter ended June 30, 2016.
Second Quarter 2016 Highlights
- Total shipments were 1,380.8MW, consisting of 1,229.3MW of modules and cells to external customers, and 151.5MW of modules to the Company's own downstream projects. External shipments were up +55.5% y/y and up +18.4% sequentially
- Shipments of modules and module tolling were 1,134.2MW, an increase of +58.1% y/y and an increase of +23.4% sequentially
- Shipments of cells and cell tolling were 95.1 MW, an increase of +29.6% y/y and a decrease of 20.0% sequentially
- Net revenue was RMB 4.1 billion ($619.0 million), an increase of +51.9% y/y and an increase of +18.6% sequentially
- Gross margin was 15.3%, a decrease of 110 basis points y/y and a decrease of 130 basis points sequentially
- Operating profit was RMB 188.0 million ($28.3 million), compared to RMB 156.1 million ($23.5 million) in the second quarter of 2015, and RMB 223.3 million ($33.6 million) in the first quarter of 2016
- Net income was RMB 164.1 million ($24.7 million), compared to RMB 136.0 million ($20.5 million) in the second quarter of 2015, and RMB 158.0 million ($23.8 million) in the first quarter of 2016
- Earnings per diluted ADS were RMB 2.87 ($0.43), compared to RMB 2.26 ($0.34) in the second quarter of 2015, and RMB 2.74 ($0.41) in the first quarter of 2016
- Cash and cash equivalents were RMB 2.0 billion ($303.0 million), a decrease of RMB 321.0 million ($48.3 million) during the quarter
- Non-GAAP earnings1 per diluted ADS were RMB 2.04 ($0.31), compared to RMB 1.67 ($0.25) in the second quarter of 2015, and RMB 2.33 ($0.35) in the first quarter of 2016
Mr. Baofang Jin, Chairman and CEO of JA Solar, commented, "Second quarter results were in line with our expectations, with shipments and revenue growing over 50% year-over-year. We are also encouraged by our downstream project development achievements as we successfully connected approximately 250MW of solar projects to the grid in the quarter. As expected, China was our strongest market in the quarter, driven by accelerated activity ahead of subsidy reductions that occurred this summer."
Mr. Jin continued, "While regulatory change should slow the domestic Chinese market in the second half of the year, we believe our balanced global footprint and flexible business model will allow us to adjust to evolving market conditions. We are carefully controlling capital expenditures and staffing, and selling effort is focused on more robust markets outside of China. Our project business provides flexibility in our business model, since we can accelerate or slow down activity in order to balance demand for our modules. The JA team remains focused on executing our business strategy to provide our customers with high-quality products in 2016 and beyond."
All shipment and financial figures refer to the quarter ended June 30, 2016, unless otherwise specified. All "year over year" or "y/y" comparisons are against the quarter ended June 30, 2015. All "sequential" comparisons are against the quarter ended March 31, 2016.
Total shipments were 1,380.8MW, largely in line with the low end of the previously announced guidance range of 1,400 to 1,500MW. External shipments of 1,229.3MW increased 55.5% year-over-year and increased 18.4% sequentially.
Net revenue was RMB 4.1 billion ($619.0 million), an increase of 51.9% y/y and an increase of 18.6% sequentially.
Gross profit of RMB 628.3 million ($94.5 million) increased 41.4% y/y and increased 9.2% sequentially. Gross margin was 15.3%, which compares to 16.4% in the year-ago quarter, and 16.6% in the first quarter of 2016.
Total operating expenses of RMB 440.3 million ($66.3 million) were 10.7% of revenue. This compares to operating expenses of 10.6% of revenue in the year-ago quarter, and 10.1% of revenue in the first quarter of 2016.
Operating profit was RMB 188.0 million ($28.3 million), compared to RMB 156.1 million ($23.5 million) in the year-ago quarter, and RMB 223.3 million ($33.6 million) in the first quarter of 2016. Operating margin was 4.6%, compared with 5.8% in the prior year period and 6.4% in the previous quarter.
Interest expense was RMB 68.8 million ($10.4 million), compared to RMB 58.6 million ($8.8 million) in the year-ago quarter, and RMB 67.3 million ($10.1 million) in the first quarter of 2016.
The change in fair value of warrant derivatives was gain of RMB 47.4 million ($7.1 million), compared with RMB 35.1 million ($5.3 million) in the year-ago quarter, and positive RMB 23.4 million ($3.5 million) in the first quarter of 2016. The warrants were issued on August 16, 2013 in conjunction with the Company's $96 million registered direct offering, and expired on August 16, 2016. The non-cash gain was mainly due to a decline in the time value of the warrants as they approached expiry. In addition, the value of the warrants was impacted by the decline in the price of the company's ADS during the quarter.
Earnings per diluted ADS were RMB 2.87 ($0.43), compared to earnings per diluted ADS of RMB 2.26 ($0.34) in the year-ago quarter, and earnings per diluted ADS of RMB 2.74 ($0.41) in the first quarter of 2016.
Liquidity
As of June 30, 2016, the Company had cash and cash equivalents of RMB 2.0 billion ($303.0 million), and total working capital of RMB 1.1 billion ($162.2 million). Total short-term borrowings were RMB 2.8 billion ($426.6 million). Total long-term borrowings were RMB 3.3 billion ($489.3 million), of which RMB 630.3 million ($94.8 million) were due in one year.
Business Outlook
For the third quarter of 2016, the Company expects total cell and module shipments to be in the range of 1,200 to 1,300MW. For the full year, the Company reiterates its prior shipment guidance of 5.2 to 5.5 GW, including 250 to 300MW of module shipments to the Company's downstream projects. Revenues will not be recognized for the modules shipped to the Company's downstream projects as required by U.S. GAAP.
