China sales dent Trina Q2 margins

China’s Trina Solar saw shipments jump in the second quarter of 2014 – but also felt the impact on its profits of selling more modules into its domestic market.

Trina shipped 943MW in the April to June period, well up on the 558MW it managed in the first quarter of 2014 – although slightly shy of the 950MW that was the lower end of its guidance figure.

Revenue grew 16.9% to $519.4m, as it saw strong demand growth in China following a “relatively weak” first quarter.

But the company’s gross margin eased back to 15.4% from the 20.6% it managed in the first quarter, with gross profit 12.3% down at $80.2m.

That gross margin figure and the shipment guidance for Q2 were among the factors that sent Trina's shares spurting 30% immediately after its first quarter results were released three months gao.

Today, by contrast, its shares hardly moved in early New York trading.

Trina said of the lower margins: “The sequential decrease was primarily due to a decrease in [average selling price] as a result of greater sales to China, in comparison to other relatively higher priced markets, as well as a slight increase in polysilicon cost on a per watt basis.

“In addition, compared to the first quarter, insignificant revenues and gross profit contribution from our downstream business, also partially resulted in an anticipated margin decrease.”

With a fourth consecutive quarterly net profit under its belt, this time of $10.3m, Trina is still vastly better placed than a year ago, when it posted a $33.7m loss for 2013’s Q2.

The PV group pointed to Japan and the US, as well as China, as engines for growth, as well as smaller but fast-developing markets such as the UK, which Trina reconfirmed as a key target.

In the current third quarter of 2014 it guided for shipments between 1,060MW and 1,120MW of modules, with 130MW to 150MW going to its own downstream PV projects.

Trina reiterated its 2014 guidance of shipments between 3.6GW and 3.8GW, including 400MW to 500MW for its own projects. It expects completed downstream PV projects of between 400MW and 500MW for the year.

Trina said despite US duties on Chinese imports, it expects to “continue to play an important role and maintain our leading market position in the US”, thanks to product quality and reputation – plus the fact that it has the lowest tariffs of any Chinese supplier.

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