China.JA Solar yesterday announced its financial results for its fourth quarter and full year ended December 31, 2010.
Fourth Quarter and Full Year 2010 Financial and Operating Highlights:
Record fourth quarter shipments of 463MW, an increase of 11% sequentially and 100% year-over-year
Full Year 2010 shipments grew to 1.46 GW, an increase of 187% over 2009
Full Year 2010 revenue of $1.78 billion, an increase of 211% from $572.5 million in 2009
Annual gross margin of 21.7%, up from 12.8% in 2009
Full year 2010 operating income of $299.6 million and operating margin of 16.8%
Full year 2010 net income of $266 million and GAAP diluted EPS of $1.61
Fourth quarter revenue of $584.3 million, operating income of $89.5 million and operating margin of 15.3%
Fourth quarter net income of $118.7 million and GAAP diluted EPS of $0.59, a sequential increase of 24.3%
Diversified global customer base in Q4: 53% international customers and 47% domestic customers
Cash balance of $346.9 million and working capital of $662.8 million
"2010 was a transformational year for our company, with annual revenues growing by 211% and shipments rising by 187% as we enhanced our position as one of the global leaders in the solar industry," said Dr. Peng Fang, CEO of JA Solar. "During the year, we firmly established JA Solar as the market leader in solar cell production and shipment. Customers worldwide responded to our clear advantages in technology, quality and cost, enabling us to build a very healthy and diversified global customer base."
"Our results in 2010 are clear proof of the success of our emphasis on developing long term partnerships with the major players in the solar industry. Today, a growing number of top tier solar companies worldwide consider JA Solar to be their strategic supply partner of choice for high-quality, low-cost PV products."
"As one of the world's largest solar cell producers, JA Solar is well-positioned to take advantage of robust industry growth in 2011. With demand for our products currently well ahead of what we can produce, we intend to quickly ramp up production capacity in 2011. In particular, we intend to increase solar cell production capacity to more than 3GW, while module capacity is expected to increase to 800MW and wafer capacity to 600MW by year-end. We also intend to continue focusing on developing innovative new technologies that can enable us to further optimize our cost structure and ensure that our high quality solar products are even more attractive to our customers."
Fourth Quarter 2010 Financial Results
Total shipments in the fourth quarter of 2010 were a record 463MW, compared with third quarter shipments of 418MW, representing sequential growth of 11%. Compared with the same period last year, shipments grew 100% from 231MW.
Revenue in the fourth quarter of 2010 was RMB 3.9 billion ($584.3 million), an increase of 6.6% compared to RMB 3.6 billion ($548.3 million) reported in the third quarter of 2010 and an increase of 137% from RMB 1.6 billion ($246.5 million) reported in the fourth quarter of 2009.
Gross profit in the fourth quarter of 2010 was RMB 740.4 million ($112.2 million), compared with RMB 816.0 million ($123.6 million) in the third quarter of 2010 and RMB 335.0 million ($50.8 million) in the fourth quarter of 2009. Gross margin was 19.2% in the fourth quarter of 2010, compared with 22.5% in the third quarter of 2010 and 20.6% in the fourth quarter of 2009.
Total operating expenses in the fourth quarter of 2010 were RMB 149.8 million ($22.7 million), compared with RMB 146.7 million ($22.2 million) in the third quarter of 2010 and RMB 88.3 million ($13.4 million) in the fourth quarter of 2009.
Operating income in the fourth quarter of 2010 was RMB 590.7 million ($89.5 million), compared with RMB 669.3 million ($101.4 million) in the third quarter of 2010 and RMB 246.7 million ($37.4 million) in the fourth quarter of 2009. Operating margin was 15.3% in the fourth quarter of 2010, compared with 18.5% in the third quarter of 2010 and 15.2% in the fourth quarter of 2009.
Earnings per diluted ADS in the fourth quarter of 2010 were RMB 3.90 ($0.59), an increase of 24% compared with RMB 3.14 ($0.48) in the third quarter of 2010 and an increase of 366% compared with RMB 0.84 ($0.13) in the fourth quarter of 2009.
Included in other income are significant transactions from activities other than normal business operations:
$34.6 million of proceeds from sales of Lehman Notes. The $100 million face-value USD 3-Month LCMNER Index-Linked Note was issued by Lehman Brothers Treasury Co. B.V. incorporated in The Netherlands and was previously written off as a result of the bankruptcy of Lehman Brothers and its affiliates. The proceeds from Lehman Notes resulted in a $0.20 gain per diluted ADS.
Non-cash gain on change in fair value of derivatives was mainly related to a convertible bond issued in May 2008. Embedded derivative was calculated using a valuation model with many input assumptions such as interest rate yield curve, foreign exchange rates, stock price, volatility, expected terms, risk-free rate and fundamental change event probabilities. This gain had a positive impact of $0.13 on basic earnings per ADS. However, due to dilution, the gain of $21.9 million was excluded from the calculation of diluted earnings per share and the share count was increased by 7.5 million shares to 172.3 million shares assuming that the convertible bonds were converted at the beginning of the quarter. The calculation reduced diluted earnings per ADS by $0.13.
The Company also recorded a net loss from discontinuing operations of $3.0 million associated with the potential sale of the 3MW solar power plant. This solar power plant was previously recorded in fixed assets. In conjunction with the potential sale, the operating results of this project have been reclassified out of continuing operations for all periods presented. The loss had an impact of $0.02 per ADS in the fourth quarter.
In the fourth quarter of 2010, the Company generated operating cash flow of RMB 169.0 million ($25.6 million) or RMB 0.98 ($0.15) per diluted ADS.
Full Year 2010 Results
Full year 2010 shipments were 1.46GW, an increase of 187%, from 509MW in full year 2009.
Total revenue for full year 2010 was RMB 11.8 billion ($1.8 billion), an increase of 211% compared with RMB 3.8 billion ($572.5 million) in full year 2009.
Total gross profit in full year 2010 was RMB 2.55 billion ($385.8 million) or 21.7%, compared with RMB 482.1 million ($73.0 million) or 12.8% in full year 2009. Operating income for full year 2010 was RMB 1.98 billion ($299.6 million), compared with RMB 93.7 million ($14.2 million) in full year 2009. In full year 2010, net income per diluted ADS was RMB 10.61 ($1.61), compared with a net loss per diluted ADS of RMB 1.20 (a loss of $0.18) in full year 2009.
For full year 2010, the Company generated an operating cash flow of RMB 1.3 billion ($193.9 million) or RMB 7.48 ($1.13) per diluted ADS.
Full Year 2011 Outlook
Based on strong customer demand for JA Solar's products and a number of new customer wins, the Company currently expects total cell and module shipments to exceed 2.2GW in 2011, representing an increase of approximately 50% compared to 2010. Module shipments are expected to be approximately 500MW to 600MW. Sales contracts signed to date for 2011 delivery amount to more than 2GW, representing approximately 90% of the Company's expected shipments for 2011.
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