‘Silicon Module Super League’ (SMSL) member JA Solar reported cautious in-line financial results for the third quarter of 2017 but guidance for the fourth quarter indicates the company could increase module shipments by almost 50%, compared to the previous year. 

The SMSL has remained cautious about its business outlook all year, despite module shipments of 2,147.5MW in the second quarter of 2017. Although the record second quarter is not expected to be repeated again this year, third quarter module shipments of 1,582.5MW and fourth quarter shipment estimates of over 1,700MW underline significant shipment expectations of over 6,800MW in 2017,  approximately a 48% increase over the previous year. 

Importantly, based on JA Solar’s capacity expansion plans in 2016 and 2017, shipments have kept inline with those expansions as the company ends 2017 with a nameplate capacity of around 7,000MW, highlighting very high utilisation rates despite the capacity increases.

Financial results

JA Solar reported third quarter 2017 revenue of US$652.6 million, an increase of 4.3% from the prior year period but a 27.1% decline from the previous quarter. 

Gross margin was 11.8% in the quarter, compared to 12.9% in the previous quarter and 11.7% in the first quarter of 2017.

Operating profit was US$25.5 million, compared to US$38.3 million in the second quarter of 2017 and US$11.8 million in the first quarter of 2017. Operating margin was 3.9%, compared with 2.9% in the prior-year period and 4.3% in the previous quarter.

JA Solar reported total shipments 1,640.9MW, consisting of 1,582.5MW of modules and 37.9MW of cells to external customers, and 20.5MW of modules to its in-house downstream projects.  

The big difference quarter-on-quarter was external PV module shipments in the second quarter of 2017 topped 2,147.5MW and solar cell shipments were also high at 167.2MW.

Baofang Jin, Chairman and CEO of JA Solar, commented: "Third quarter results were in-line with our expectations.  Total module shipments during the quarter increased more than 30% year-over-year to approximately 1.6 GW, largely driven by demand from our key markets, including China, the U.S., Europe and Japan.  Additionally, we maintained gross margin in the low teens through stringent cost control in an adverse pricing environment of polysilicon and wafers during the quarter."

China remains the key market for JA Solar, despite the overall shipment decline, quarter-on-quarter, which accounted for over 47% of module shipments in the quarter, compared to almost 60% in the previous quarter. 

North America was the second largest market for JA Solar, accounting for over 17% of shipments, compared to 8% in the second quarter of 2017. Asia Pacific retained importance for accounting for over 16% of shipments, down from nearly 25% in the previous quarter. Shipments to Europe increased to over 14% of shipments in the third quarter, up from only 5% in the previous quarter. 

Guidance

JA Solar said it expected fourth quarter of 2017 total cell and module shipments to be in the range of 1,600 to 1,800 MW with nearly all shipments being external.  

As highlighted, JA Solar is on track to achieve full-year module shipments in the region of 6.8GW in 2017.