March 25, 2013 - JA Solar Holdings Co., Ltd. today announced its unaudited financial results for its fourth quarter and fiscal year ended December 31, 2012.
Fourth Quarter 2012 Highlights
Shipments were 500MW, above the high end of the Company's previous guidance of 420MW, and exceeding the 418MW shipped in the third quarter of 2012
Net revenue was RMB 1.7 billion ($268.1 million), an increase of 1.8% from RMB 1.6 billion ($263.2 million) in the third quarter of 2012
Gross margin was negative 4.6%, compared with negative 5.9% in the third quarter of 2012
Operating loss was RMB 549.6 million ($88.2 million), compared with operating loss of RMB 631.3 million ($101.3 million) in the third quarter of 2012
Net loss was RMB 637.9 million ($102.4 million), compared with a net loss of RMB 371.4 million ($59.6 million) in the third quarter of 2012.
Loss per diluted ADS1 was RMB 16.50 ($2.65), compared with a loss per diluted ADS of RMB 9.55 ($1.53) in the third quarter of 2012
Operating cash flow was negative RMB 27.5 million ($4.4 million), compared with positive RMB 176.1 million ($28.2 million) in the third quarter of 2012
Cash and cash equivalents at the end of the quarter were RMB 3.0 billion ($486.6 million), compared with RMB 3.4 billion ($548.5 million) at the end of the third quarter of 2012
Fiscal Year 2012 Highlights
Shipments grew to approximately 1.7GW, an increase of 0.4% from 1.69GW in fiscal year 2011
Net revenue was RMB 6.7 billion ($1.1 billion), compared with net revenue of RMB 10.7 billion ($1.7 billion) in fiscal year 2011
Gross margin was negative 0.8%, compared with gross margin of positive 4.3% in fiscal year 2011
Operating loss was RMB 1.5 billion ($240.1 million), compared with operating loss of RMB 420.5 million ($67.5 million) in fiscal year 2011
Net loss was RMB 1.7 billion ($275.8 million) and loss per diluted ADS was RMB 44.10 ($7.10), compared with loss per diluted ADS of RMB 16.90 ($2.71) in fiscal year 2011
Operating cash flow was positive RMB 8.6 million ($1.4 million), compared with operating cash flow of positive RMB 364.4 million ($58.5 million) in fiscal year 2011
Cash and cash equivalents at the end of the year were RMB 3.0 billion ($486.6 million), compared with RMB 3.9 billion ($624.2 million) at the end of fiscal year 2011
1 Each ADS represents five ordinary shares, effective on December 10, 2012.
Mr. Baofang Jin, executive chairman and CEO of JA Solar, commented, "2012 was another challenging year for the solar sector as industry-wide overcapacity continued to put downward pressure on ASP and margins. In response, we have been readjusting and optimizing our business to ensure we maintain our market-leading position. In the fourth quarter, shipments exceeded the top end of our prior guidance, largely due to a better-than-expected performance across key growth markets. The proportion of modules , including module tolling, in our overall product mix increased to 64.4% of total shipments and 70.1% of revenue by the fourth quarter."
Mr. Jin continued, "In the fourth quarter, shipments to Japan, where we have established ourselves as one of the top international suppliers, and China grew significantly. Shipments to the U.S. declined in the quarter due to seasonality, although we expect to see increasing demand there in 2013. We're optimistic that we will continue to make inroads into other markets, including the Middle East, Australia and Latin America, all of which have promising long-term potential."
"Moving into 2013, we remain focused on cost reduction and stringent cash management, while maintaining our leadership position in technology through continued R&D efforts and manufacturing process optimization. Ultimately, we believe JA Solar's value proposition, which combines high-quality, high-efficiency products with prudent financial management, will see us emerge from this difficult environment as one of the industry's long-term winners."
Fourth quarter 2012 Financial Results
Total shipments in the fourth quarter of 2012 were 500MW, exceeding the high end of the Company's previously provided guidance of 380MW to 420MW, an increase from the 418MW shipped in the third quarter of 2012, and a 25.6% increase from 398MW in the fourth quarter of 2011.
Net revenue in the fourth quarter of 2012 was RMB 1.7 billion ($268.1 million), an increase of 1.8% from RMB 1.6 billion ($263.2 million) in the third quarter of 2012, and a decrease of 14.2% from RMB 1.95 billion ($312.3 million) in the fourth quarter of 2011.
Gross loss in the fourth quarter of 2012 was RMB 77.1 million ($12.4 million), compared with a gross loss of RMB 96.6 million ($15.5 million) in the third quarter of 2012 and a gross profit of RMB 9.1 million ($1.5 million) in the fourth quarter of 2011. Gross margin was negative 4.6% in the fourth quarter of 2012, compared with negative 5.9% in the third quarter of 2012 and positive 0.5% in the fourth quarter of 2011.
Total operating expenses were RMB 472.5 million ($75.8 million), compared with RMB 534.6 million ($85.8 million) in the third quarter of 2012 and 496.7 million ($79.7 million) in the fourth quarter of 2011. Total operating expenses in the fourth quarter of 2012 included an accounts receivable provision of RMB 134.1 million ($21.5 million), and a long-lived asset impairment of RMB 147.1 million ($23.6 million) related to the retirement of 300MW of outdated cell production capacity and 300MW of outdated module production capacity.
Operating loss in the fourth quarter of 2012 was RMB 549.6 million ($88.2 million), compared with an operating loss of RMB 631.3 million ($101.3 million) in the third quarter of 2012 and an operating loss of RMB 487.6 million ($78.3 million) in the fourth quarter of 2011. Operating margin was negative 32.9% in the fourth quarter of 2012, compared with a negative operating margin of 38.5% in the third quarter of 2012 and a negative operating margin of 25.1% in the fourth quarter of 2011.
Other income in the fourth quarter of 2012 was RMB 20.5 million ($3.3 million), compared with other income of RMB 363.7 million ($58.4 million) in the third quarter of 2012 and other income of RMB 208.9 million ($33.5 million) in the fourth quarter of 2011.
Tax expense in the fourth quarter of 2012 was RMB 5.3 million ($0.9 million), compared with tax benefit of RMB 25.4 million ($4.1 million) in the third quarter of 2012 and a tax expense of RMB 33.5 million ($5.4 million) in the fourth quarter of 2011. In June 2012, JA Hebei received a ruling from the local tax bureau of Xingtai City, Hebei Province (the "Local Tax Bureau"), that JA Hebei should not have enjoyed the previously grandfathered tax holiday related to the portion of the taxable income of JA Hebei attributable to a capital injection made in 2008 (the "2008 Capital Injection"). Consequently, the Company recorded tax payable of RMB 81.2 million ($13.0 million) at the end of the second quarter of 2012 and made a subsequent payment in July 2012. However, the Company believes its tax position related to the 2008 Capital Injection has been and is still in compliance with the PRC Corporate Income Tax Law, and therefore appealed in September 2012. In December 2012, the Company received a full refund from the Local Tax Bureau, and recognized a tax benefit of RMB 81.2 million ($13.0 million) offsetting the initial charge. In February 2013, JA Hebei received a notice from the Local Tax Bureau that JA Hebei should not have enjoyed the previously approved tax holiday related to the portion of the taxable income of JA Hebei attributable to a separate capital injection made in 2007 (the "2007 Capital Injection"). Consequently, the Company recorded an additional income tax expense of RMB 82.5 million ($13.3 million) at the end of 2012 with respect to the 2007 Capital Injection.
Loss per diluted ADS in the fourth quarter of 2012 was RMB 16.50 ($2.65), compared with loss per diluted ADS of RMB 9.55 ($1.53) in the third quarter of 2012 and loss per diluted ADS of RMB 12.25 ($1.97) in the fourth quarter of 2011.
In the fourth quarter of 2012, the Company had a negative operating cash flow of RMB 27.5 million ($4.4 million), compared with a revised positive operating cash flow of RMB 176.1 million ($28.2 million) in the third quarter of 2012, after a reclassification of a gain of RMB 369.2 million ($59.3 million) related to sales proceeds of certain rights pertaining to its share lending arrangement claim against Lehman Brothers International (Europe) Limited from operating activities to financing activities.
Fiscal Year 2012 Results
Fiscal year 2012 shipments were 1.7GW, an increase of 0.4% from 1.69GW in fiscal year 2011.
Net revenue in fiscal year 2012 was RMB 6.7 billion ($1.1 billion), a decrease of 37.4% from RMB 10.7 billion ($1.7 billion) in fiscal year 2011.
Total gross loss in fiscal year 2012 was RMB 54.4 million ($8.7 million) or 0.8% of revenue, compared with gross income of RMB 461.3 million ($74.0 million) or 4.3% of revenue in fiscal year 2011. Operating loss in fiscal year 2012 was RMB 1.5 billion ($240.1 million), compared with operating loss of RMB 420.5 million ($67.5 million) in fiscal year 2011. In fiscal year 2012, net loss per diluted ADS was RMB 44.10 ($7.10), compared with net loss per diluted ADS of RMB 16.90 ($2.71) in fiscal year 2011.
In fiscal year 2012, the Company generated a positive operating cash flow of RMB 8.6 million ($1.4 million) or RMB 0.22 ($0.04) per diluted ADS.
Liquidity
As of December 31, 2012, the Company had cash and cash equivalents of RMB 3.0 billion ($486.6 million) and total working capital of RMB 1.2 billion ($193.6 million). Total short-term bank borrowings and convertible notes due 2013 were RMB 1.7 billion ($269.9 million). Total long-term bank borrowings were RMB 3.9 billion ($632.2 million), among which RMB 1.9 billion ($297.0 million) were due in one year. The total face value of outstanding convertible notes due 2013 was RMB 726.4 million ($116.6 million) at December 31, 2012.
Business Outlook
For the first quarter of 2013, the Company expects total cell and module shipments to be between 410MW and 430MW. For the full year 2013, the Company expects total cell and module shipments to be between 1.7GW and 1.9GW.
Manufacturing Capacity Update
In the fourth quarter of 2012, in an effort to streamline production processes and increase production efficiency, JA Solar retired 300MW of cell production capacity and 300MW of module production capacity. As of December 31, 2012, JA Solar had an annual wafer production capacity of 1.0GW, an annual cell production capacity of 2.5GW and an annual module production capacity of 1.8GW. JA Solar intends to maintain its annualized wafer, cell, and module capacities in 2013.
