One of the more surprising revelations in the solar industry recently is the relative weakness of Yingli Green Energy
But that hasn't stopped management from boldly predicting increased shipments and growing capacity in 2012. The company's 750 MW expansion is scheduled to be completed in the third quarter, giving the company 2.45 GW of capacity, and management expects to ship 2.4 GW to 2.5 GW in 2012. That's more than the company could produce, suggesting that management is expecting demand strong enough to draw down inventory.
Back to the numbers
During the fourth quarter, revenue fell 29.8% from last quarter to $408 million, and Yingli's net loss ballooned to $599.4 million because of a number of writedowns. Without the writedowns, gross margin would have been 12.7%, one of the best margins among Chinese manufacturers.
Sales in China accounted for 31% of revenue in the fourth quarter, highlighting the increasing importance of China for manufacturers. With uncertain demand in Europe, the hope is that China will be able to fill the gap for many manufacturers.
Management's confidence in the long-term growth of solar shows in their guidance, where in 2012 they expect up to 55.9% growth in shipments. That suggests that this quarter's drop in shipments is a blip and not a trend for future quarters.
What this means for the industry
If Yingli struggled with sales this quarter, it would suggest that lower-tier companies LDK Solar, JA Solar, and Hanwha SolarOne may also have struggled. But other manufacturers were strong, suggesting otherwise. So the picture is a bit foggy.
Before betting among the lower-tier manufacturers, though, I would wait to see how earnings look. Even among top-tier manufacturers, Yingli and First Solar struggled while Suntech, SunPower, and Canadian Solar performed well. Betting on third-tier manufacturers may be even more of a crapshoot.
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Fool contributor Travis Hoium manages an account that owns shares of SunPower, and he owns shares of First Solar and SunPower in his personal account. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.
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