Yingli slashes full-year shipment forecast as loss widens

Shares of China’s Yingli Solar plunged Tuesday morning and touched a new all-time low, after the PV giant slashed its shipment forecast for 2015, saying it does not have enough money to run its production lines.

Yingli, which is struggling to service about $2.3bn of debts, now expects to ship 2.5GW-2.8GW of modules this year. The company predicted 3.6GW of shipments when it released its first-quarter financials in June, and 3.9GW as recently as March 2015.

Asked why Yingli is reducing shipments at a time when the global PV market is expanding, chief executive Yiyu Wang pointed to the challenging debt-reduction treadmill the company is currently on.

Yingli repaid 1.2bn yuan ($190m) in medium-term notes as they came due this May, and faces another 1bn yuan repayment in October.

Given its debt burden and its shrinking revenues, “our resources that we can use in production will be negatively impacted”, Wang said in a conference call with analysts.

“Therefore, we have to cut some of [our] orders to reflect these kinds of challenges.”

Yingli may take on more OEM work for other module makers, Wang says, but that production will not count as the company's own.

As it searches for ways to meet its looming 1bn yuan repayment obligation next month, Yingli is not considering selling existing production facilities, Wang insists.

Instead, the company is looking to off-load idle land, downstream PV projects, and “other investments and assets” to repay the medium-term notes.

Pressed on how Yingli expects to return to profitability given its financial hole, Wang said the company has “already started discussions and communication with several big business partners in China [about] some strategic investment”.

Investors, however, remain unconvinced.

By late Tuesday morning, Yingli shares had fallen more than 15% to $0.61. The company must somehow get its share price back above $1 to remain eligible for inclusion on the New York Stock Exchange, where it has been listed for nearly a decade.

Yingli, which started 2015 with a share price of $2.35, has found itself in increasingly dire straits as the year has unfolded.

In May it sent investors into a panic by flagging “substantial doubts” about its future.

Its second-quarter net loss of 298m yuan compares to a deficit of 285.2m yuan at the same stage in 2014, and 363.2m in the prior first quarter of this year.

Its revenues of 2.7bn yuan in the quarter compare to 3.5bn yuan in the year-ago period. Quarterly shipments fell to 728MW, from 888MW in Q2 2014.

As the company warned in August, its second-quarter gross margin more than halved to 6.3%, hurt by lower sales prices in the Chinese market and higher manufacturing costs due to a lower utilization rate.