With China’s latest pandemic crackdown exacerbating existing raw material and shipping costs, large annual increases in solar cell and module shipments have led to a more than 91% decline in operating revenue in just three month.
While Chinese manufacturer JinkoSolar is understandably keen to trumpet the fact that it has become the first company in the world to ship more than 100 GW of solar panels, its latest set of quarterly figures revealed how recent anti-pandemic measures from China are wreaking havoc. causing for the industry.
Jinko Chairman Xiande Li pointed to a backdrop of polysilicon expenses and shipping costs. “The epidemic prevention and containment policies in China since March have resulted in logistics congestion and severe reductions in transportation capacity, which have further increased cost pressures,” he said.
The extent of these pressures was described in an operating profit margin figure that fell from 3% in the last three months of last year to just 0.3% in the January-March period. This means that the amount of profit received by the manufacturer for each yuan of sales fell by 90% in three months.
This led to a drop in operating income from CNY486 million ($74.1 million) in the fourth quarter of last year to just CNY40.8 million in the last three-month window. This leaves shareholders with a quarterly profit of only CNY 28.9 million, compared to CNY 240 million in the October-December period and CNY 221 million a year earlier.
This drop in net income was recorded despite an 86% year-on-year increase in first-quarter revenue to 14.8 billion yuan – although down 9.9% from the previous quarter – and a 57% annual increase in deliveries to 8.4 GW, down again from 13.4. % since the end of last year.
“To overcome these difficulties, we took early action to secure ample reserves of raw materials,” Li wrote. And this was reflected in the CNY 3.46 billion paid by the company to its suppliers at the end of March. , compared to CNY 1.84 billion at the end of 2021.
“We believe the impact of the pandemic on production and operations is temporary,” Jinko’s chairman said. He also claimed that the continued escalation in solar product prices has “convinced some customers not to wait any longer to start new projects,” even as pandemic restrictions currently being enforced across China have delayed the construction of some solar fields.
This positive outlook has persuaded the manufacturer to move forward with production capacity expansion plans, which will see the 16.9 GW of annual monosilicon n-type cell capacity brought online last quarter nearly double. to reach 32.9 GW by the end of the year, as well as single wafer and module capacity increases, from the current 40 GW and 50 GW to 55 GW and 60 GW respectively. That 32.9 GW of n-type cell capacity will be part of the 55 GW of total cell capacity this year, according to Jinko, up from 40 GW.
While the manufacturer claims a new global cell conversion efficiency record of 25.7% for its TOPCon n-type product in the last quarter, Jinko maintained its full-year shipment guidance at 35 GW to 40 GW, with 8.5 GW to 9.5 GW expected to be changed in the current quarter.
In terms of balance sheet, Jinko’s investment in new production capacity saw its long-term borrowings drop from CNY 9.9 billion at the end of the year to CNY 11.1 billion four weeks ago. , while total interest-bearing debt increased from CNY 25.6 billion to CNY 27.5 billion, but its cash reserves also increased, almost doubling from CNY 8.92 billion to CNY 16.9 billion.
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