ReneSola has reported revenue of $187.0 million for the third quarter ended September 30, 2016, down 49.2 percent YoY.
The third quarter financial results fell short of expectations, as weak demand led to reduced shipments and significant pricing pressure, said Xianshou Li, ReneSola’s CEO.
Total external module shipments were 191.2 MW while module shipments to the Company’s downstream projects were approximately 6.1 MW;
Total external wafer shipments were 290.5 MW compared with 423.3 MW in Q2 2016 and 341.6 MW in Q3 2015;
The company has recognized revenue of $27.8 million from the sale of four utility-scale projects in UK with capacity of approximately 20 MW;
This quarterly result also represents the company’s first loss after four consecutive profitable quarters, Li added.
“Looking forward, we anticipate the solar industry headwinds to continue into 2017. As we navigate challenging market conditions, we intend to remain fully focused on project development with rapid monetization, expansion through technology improvements, and streamlined operations with prudent cost control,” Li said.
Revenue of $187.0 million was down 25.2% q/q and down 49.2% y/y. Revenue declined due to lower blended ASP and reduced product shipments to external customers due to decreased market demand. The Company remains committed to using the solar products business as a foundation to drive growth through downstream project development.
Gross profit of $18.9 million was down 54.2% q/q and down 68.2% y/y. Gross margin decreased to 10.1% from 16.5% in Q2 2016 and from 16.1% in Q3 2015. The sequential margin decline was primarily due to lower wafer and module ASPs, as well as an increase in polysilicon cost.
Operating expenses of $30.7 million were down 11.6% q/q and down 35.9% y/y. The decrease in operating expenses reflects efficient expense control. Sequentially, SG&A expense decreased by 16.5% and R&D expense decreased by 15.0%.
Operating loss was $11.9 million, compared to operating income of $6.4 million in Q2 of 2016 and $11.4 million in Q3 of 2015.
Non-operating expenses of $10.6 million include net interest expense of $7.7 million and foreign exchange loss of $3.3 million, partially offset by gains on derivatives of $0.3 million.
Net loss was $20.5 million, compared to a net income of $5.5 million in Q2 of 2016 and $8.6 million in Q3 of 2015. Loss per ADS were $0.20, compared to earnings per ADS $0.05 in Q2 of 2016.
In the third quarter, the Company recognized revenue from four utility-scale projects in the United Kingdom sold in the second quarter. These projects had approximately 20.0 MW of generating capacity. Additionally, the Company sold two utility-scale projects in Japanwith a total capacity of 2.5 MW and rooftop projects of 1.3 MW in the domestic Chinese market in the third quarter.
As announced in early November, the Company signed agreements to sell six utility-scale projects in the United Kingdom to a European buyer. These projects have a combined capacity of approximately 26MW. Revenue from the sales of these projects is expected to be recognized in the fourth quarter of 2016.
Project Pipeline
The Company currently has a pipeline of over 1 GW of projects in various stages, of which 448 MW are projects that are “shovel-ready
During the third quarter, total external module shipments were 191.2 MW, down 32.3% from the second quarter of 2016 and down 52.9% from the third quarter of 2015. Total wafer shipments were 290.5 MW, down 31.4% from the second quarter of 2016 and down 15.0% from the third quarter of 2015. The reduction in shipments reflected softened demand in the domestic market, as project completions were pulled into the first half in order to qualify for higher FiT.
LED revenue of $7.1 million was down 8.9% from $7.8 million in Q2 2016. Gross margin was approximately 30%. The decline in revenue reflects the temporary slowdown attributable to Ramadan and the summer holidays in Europe.
Despite the sequential revenue decline, ReneSola is optimistic about the growth prospects in LED business.
For the fourth quarter, the Company expects revenue in the range of $220 million and $240 million and gross margin in the high-single digits. The outlook reflects reduced shipments due to weak domestic demand, high polysilicon prices, and declining wafer prices, a statement from ReneSola said.