Trina Solar: $29.8 million net loss in Q1 2012 Results
Changzhou, China - Trina Solar Limited, a integrated manufacturer of solar photovoltaic products, announced its financial results for the first quarter of 2012. Net revenues in the first quarter of 2012 were $349.9 million, a decrease of 19.7% sequentially and 36.5% year-over-year. Total shipments were 380.0 MW, compared to the Company's previous guidance of between 400 MW to 430 MW, compared to 424.9 MW in the fourth quarter of 2011 and 320.4 MW in the first quarter of 2011. The sequential decrease in revenues was primarily due to lower total shipments combined with a decrease in module average selling price, while the year-over-year decrease was due primarily to lower module average selling price.
Gross Profit and Margin
Gross profit in the first quarter of 2012 was $20.3 million, compared to $31.0 million in the fourth quarter of 2011 and $151.3 million in the first quarter of 2011. Gross profit during the first quarter of 2012 includes provisions of $6.9 million and $19.3 million for potential countervailing and anti-dumping duties, respectively, relating to the import of solar modules into the United States during the first quarter. Gross margin was 5.8% in the first quarter of 2012, compared to the Company's previous guidance of low teens in percentage terms, compared to 7.1% in the fourth quarter of 2011 and 27.5% in the first quarter of 2011. The sequential decrease in gross margin was due primarily to anti-dumping and countervailing duty provisions offsetting reduced costs, while the year-on-year decrease in gross margin was due primarily to module average selling price declines in excess of reduced costs. The Company's gross profit and gross margin, excluding the provisions for potential countervailing and anti-dumping duties, were $46.5 million and 13.3%, respectively.
Operating Expense, Income and Margin
Operating expenses in the first quarter of 2012 were $60.1 million, a decrease of 36.0% sequentially and 9.9% year-over-year. The Company's operating expenses represented 17.2% of its first quarter net revenues, a decrease from 21.6% in the fourth quarter of 2011 and an increase from 12.1% in the first quarter of 2011. The sequential percentage decrease was primarily due to a reduction in allowances for doubtful receivables in the first quarter of 2012 while the year-to-year percentage increase was primarily due to the decrease in net revenues. Operating expenses in the first quarter of 2012 included $2.0 million in share-based compensation expenses, compared to $2.0 million in the fourth quarter of 2012 and $1.6 million in the first quarter of 2011.
As a result of the foregoing, loss from operations in the first quarter of 2012 was $39.9 million, compared to operating loss of $62.9 million in the fourth quarter of 2011 and operating income of $84.5 million in the first quarter of 2011. Operating margin was negative 11.4% in the first quarter of 2012, compared to negative 14.4% in the fourth quarter of 2011 and 15.3% in the first quarter of 2011.
Net Interest Expense
Net interest expense in the first quarter of 2012 was $8.8 million, compared to $8.3 million in the fourth quarter of 2011 and $6.7 million in the first quarter of 2011. The sequential increase in net interest expense was primarily due to an increase in average bank borrowings, partially offset by an increase in interest income in the first quarter of 2012.
Net Income
As a result of the foregoing, net loss was $29.8 million in the first quarter of 2012, an decrease from net loss of $65.8 million in the fourth quarter of 2011 and a decrease from net income of $47.7 million in the first quarter of 2011. Net margin was negative 8.5% in the first quarter of 2012, compared to negative 15.1% in the fourth quarter of 2011 and 8.7% in the first quarter of 2011.
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