It seems like players in the solar industry are going to face another earnings season where their profits could tank big time. JinkoSolar
Let's take a look at how JinkoSolar did and what lies ahead.
JinkoSolar saw its revenues shoot up some 24% to $279 million from the year-ago period on the back of a 91% jump in shipments from last year. But if we look at the sequential change, shipments show a marginal decline, and revenues slumped 21%.
The softness -- which was triggered by subsidy cuts in the European market, the largest buyer of solar products -- led to an oversupply in the market as customers cut down on demand. This, in turn, has led to significant price declines and piling up of inventories as solar companies find it difficult to push out their products. All these factors led to a jaw-dropping 72% decline in net income for JinkoSolar.
Signs are not encouraging, as JinkoSolar has slashed its shipment forecast for the full year by a significant 20%.
Not really. Weak demand and a fall in the average selling prices of solar products have led companies in this space to cut down on shipment and revenue forecasts. The situation is such that Trina Solar
Although polysilicon prices haven't gone down as much, solar cell prices were down 60% this year. Solar leaders like First Solar
The Foolish bottom line
With the plethora of challenges that the industry faces, it seems like the going will be difficult for the solar players. In the second quarter, the Chinese companies had done considerably well, but even they are now hanging by a thread and sliding toward losses. The exact degree of damage the industry may suffer will be clearer after the others come up with their earnings, but whispers suggest that even they are staring at humongous losses.
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Fool contributor Harsh Chauhan owns none of the stocks mentioned in the article. The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.