JinkoSolar Reports Another Quarterly Loss

China-based solar company JinkoSolar Holding Co., Ltd (NYSE:JKS) released its Q4 results on Wednesday. The business reported a sixth consecutive quarterly loss as its revenues fell on the back of a weak pricing environment, while its operating expenses tripled to almost $125M. The company’s revenues for the three months ending December 31st dropped by 2.61% year-over-year and 12.21% sequentially to $187.3M, despite recording shipments at the high end of projection. The business had earlier given a shipment forecast of 250MW – 300MW. Actual shipments during the quarter were 301.9MW, down 9.9% sequentially, but up 33% from 2011 levels. JinkoSolar’s cost of revenues dropped by 10.20% from the same quarter last year, and by 10.28% from the previous quarter, to $180.2M. As a result, the company was able to produce a modest gross profit of $7M, down from a gross profit of $12.53M in the previous quarter and a significant improvement from a gross loss of $8.44M in the year-ago quarter. However, the company’s operating expenses ballooned by 194.81% from Q4-2011 and by 311.68% from Q3-2012 to a staggering $124.83M. The significant increase in operating expenses came on the back of an increase in general and administrative expenses to $81.87M from $26.7M in Q4-2011 and just $13.17M in Q3-2012. The total general and administrative expenses also included $58.4M as provision for bad debts; the amount was $6.44M in Q4-2011 and $1.89M in Q3-2012. Moreover, total operating expenses also included $15.6M as provision for advances given to suppliers and $10.5M as impairment charges, neither of which were present in Q4-2011 and Q3-2012. As a result, the business ended up with another quarterly net loss of $122.17M, showing a considerable increase from a net loss of $59.19M in Q4-2011 and a net loss of $18.49M in Q3-2012. Commenting on the results, the company’s chief executive Kangping Chen said, “Our business continued to face significant challenges during the fourth quarter due to continued module oversupply and the economic uncertainties lingering over the global economy." Like its peer JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO), JinkoSolar is also looking to expand into some of the emerging markets. “As the European economies continue to struggle, we are focused on diversifying our presence in emerging solar markets such as China, Japan, the United States, South Africa and India.” the CEO said. Although the business is a late entrant in Japan, it has signed more than 100MW of shipments to the nation so far and is emerging as a strong competitor. In the U.S., Chen believes that JinkoSolar has adjusted their “strategy to accommodate the AD/CVD tariffs.” The fourth quarter also included 60MW of shipments to India, while it has recently entered into a 115MW contract in South Africa. In China, following the 50MW contract with Three Gorges New Energy Corp. (TGNE) signed in Q4-2012, JinkoSolar has now entered a “three-year framework agreement” for 600MW modules with TGNE. For the current quarter, JinkoSolar has given a shipment guidance of 270MW – 300MW.