JA Solar Announces Third Quarter 2010 Results

/ Source: GlobeNewswire

SHANGHAI, China, Nov. 9, 2010 (GLOBE NEWSWIRE) -- JA Solar Holdings Co., Ltd., (Nasdaq:JASO), one of the world's largest manufacturers of high-performance solar cells and solar power products, today announced financial results for its third quarter 2010, ended Sept. 30, 2010.

Third Quarter Highlights:

-- Record Q3 shipments of 418MW, above guidance of 375MW, an increase of 34% sequentially

-- Record Q3 revenue of $541M, an increase of 52% over second quarter revenue

-- Diversified global customer base: 53% international customers and 47% domestic customers

-- Shipped one gigawatt of solar products in the first three quarters of 2010, above cumulative total historical shipment from company's inception through 2009

-- Q3 gross profit of $121.8 million and gross margin of 22.5%, exceeding guidance of 20%

-- Q3 operating expenses of 4.1% of total revenue, below previous guidance of 6%

-- Q3 operating income of $99.9 million and operating margin of 18.5%

-- Record net income of $76.8 million and GAAP EPS of $0.47, an increase of more than 161% sequentially

-- Strong balance sheet with cash balance of $309 million and working capital of $539 million

-- Increasing annual shipment guidance to 1.45GW, compared with prior guidance of 1.35GW

Highlights Subsequent to Sept. 30, 2010:

-- Signed solar product supply agreements with global customers for 2011 delivery totaling more than 1.2GW, and received prepayments associated with these orders

-- Announced more than 185MW strategic supply agreement with BP Solar

-- Capacity expansion ramp up ahead of schedule and reached 1.9GW

"We are pleased to deliver our fifth consecutive quarter of record shipments, with strong operating and financial results that exceeded our previous guidance," said Dr. Peng Fang, CEO of JA Solar. "JA Solar has achieved the one gigawatt shipment milestone in the first three quarters of 2010 and we will continue to deliver high quality, technologically advanced photovoltaic products to fulfill the fast growing global demand for clean energy. We continued to strengthen our market leadership by expanding our annual cell manufacturing capacity to 1.8 gigawatts at the end of September, and we recently reached 1.9 gigawatts of solar cell capacity, ahead of our capacity expansion schedule. 

"Business momentum and visibility continues to be strong, and we are seeing robust demand for our high quality products from both existing and new customers. As we continue to develop strong partnerships with leading international solar companies, we are expanding our customer base worldwide, with strong growth in several geographic end markets including, The United States, Canada, Italy, Japan, Australia, China and India. We believe our strategy of partnering with well established solar companies with strong presence in these geographies will help us to further capture market share and participate in the growth of these new markets," he said. 

"Based on increasing customer orders, we expect to continue to grow in the fourth quarter and we are raising our full year 2010 shipment guidance from 1.35GW to 1.45GW. Due to our reputation for quality, reliability and on-time delivery, customers have chosen JA Solar as their preferred supplier and depend on us for their future photovoltaic product needs. We have signed supply agreements with multiple customers for 2011 product delivery that now exceed 1.2GW, and have received prepayments associated with these supply agreements, further improving our future order visibility."

Third Quarter 2010 Financial Results

Third quarter 2010 revenue was a record RMB 3.6 billion ($541.0 million), a sequential growth of 52 percent from RMB 2.4 billion ($356.0 million) reported in the second quarter. This compares with revenue reported in the third quarter a year ago of RMB 1.3 billion ($197.2 million).  Total shipments in the third quarter of 2010 were 418MW, compared with the second quarter shipments of 311MW, representing an increase of 34 percent. Compared with third quarter shipments a year ago of 177MW, total shipment increase was over 136 percent.

Sales to international customers expanded during the third quarter to 53 percent of total revenue, an increase of 700 basis points from the previous quarter of 46 percent.  In the third quarter a year ago, sales to international customers represented 23 percent of total revenue. The strong growth of sales to international customers, representing an increase of 3000 basis points over the third quarter a year ago, resulted from management's efforts to establish a well diversified global customer base to be closer to the local geographic end markets.

Gross margins were RMB 815.0 million ($121.8 million), an increase of RMB 264.8 million ($39.6 million), or over 48 percent, from second quarter gross margins of RMB 550.2 million ($82.2 million). Gross margin percentage in the third quarter was 22.5 percent, exceeding our previous guidance of 20 percent. Compared with second quarter gross margin of 23.1 percent, the slight decrease in gross margin was primarily due to increase in wafer cost which was partially offset by an increase in the average selling price, as well as a change in product mix.

Total operating expenses in the third quarter were RMB 146.7 million ($21.9 million), compared with RMB 188.3 million ($28.1 million) in the second quarter. Total operating expenses represented 4.1 percent of total revenue compared with 7.9 percent in the second quarter and below our previous guidance of 6 percent of total revenue. 

GAAP earnings per diluted ADS in the third quarter were RMB 3.14 ($0.47), compared with RMB 1.20 ($0.18) in the second quarter of 2010, representing an increase of over 161 percent. Change in fair value of derivatives, a non-cash expense, totaled a RMB 37.7 million ($5.6 million) loss in the third quarter compared with a RMB 34.0 million ($5.1 million) loss in the second quarter. The non-cash impact of the change in fair value of derivatives was RMB 0.23 ($0.03) per diluted ADS in the third quarter. The impact of significant non-cash items including a provision for prepayments to Shunda and change in fair value of derivatives was RMB 0.61 ($0.09) per diluted ADS in the second quarter.

Financial Position and Liquidity

The company continues to maintain a strong balance sheet, with cash and cash equivalents of RMB 2.1 billion ($309.4 million), and total working capital of RMB 3.6 billion ($538.7 million) at Sept. 30, 2010. Average DSOs were 25 days, and average inventory turns were 43 days. The company's total long-term bank borrowings were RMB 1.3 billion ($188.3 million). The face value of the convertible bonds, due 2013, outstanding was RMB 1.5 billion ($228.2 million) at Sept. 30, 2010.


Based on strong demand for JA Solar's products, the company is raising its outlook for the full year of 2010. The company currently expects shipments to exceed 1.45GW in 2010, compared with prior guidance of 1.35GW. Shipments in the fourth quarter of 2010 are expected to be approximately 450MW. 

Investor Conference Call / Webcast Details

A conference call has been scheduled for Tuesday, Nov. 9, 2010 at 8:00 am Eastern time. The call may be accessed by dialing 1.866.713.8307 (U.S.) or 1.617.597.5307 (international). The passcode is JA Solar.  A live webcast of the conference call will be available on the company's website at www.jasolar.com. A replay of the call will be available beginning two hours after the live call and will be accessible by dialing 1.888-286-8010 (U.S.) or 1. 617-801-6888 (international). The passcode for the replay is 46278517.

Currency Convenience Translation

The conversion of Renminbi into U.S. dollars in this release, made solely for the convenience of the reader, is based on the noon buying rate in the city of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York as of September 30, 2010, which was RMB 6.6905 to $1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on September 30, 2010, or at any other date. The percentages stated in this press release are calculated based on Renminbi.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words such as "may," "expect," "anticipate," "aim," "intend," "plan," "believe," "estimate," "potential," "continue," and other similar statements. Statements other than statements of historical facts in this announcement are forward-looking statements, including but not limited to, our expectations regarding the expansion of our manufacturing capacities, our future business development, and our beliefs regarding our production output and production outlook. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the company and the industry. Further information regarding these and other risks is included in Form 20-F and other documents filed with the Securities and Exchange Commission. The company undertakes no obligation to update forward-looking statements, except as may be required by law. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

About JA Solar Holdings Co., Ltd.

JA Solar Holdings Co., Ltd. is a leading manufacturer of high-performance solar power products. The company sells its products to solar manufacturers worldwide, who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for residential, commercial, and utility-scale power generation. For more information, please visit http://www.jasolar.com.

CONTACT: Stapleton Communications Alexis Pascal 1.650.470.0200 alexis@stapleton.com