Profitable Q2 2014 for SOL

Chinese wafer and solar module maker ReneSola (SOL) gave a good set of results, reporting a GM of almost 15% which is one of the highest in the past 2-3 years. The company managed to ship almost 500 MW of module shipments which makes it amongst the largest players in the world. The company said that it improved its margins due to lower costs of production and the starting of its low cost poly plant. The company continued to reduce its reliance on selling wafers, which was only 200 MW in this quarter – a decline of almost 50% y/y as it uses most of its wafer for internal production.

ReneSola has become the first big player to use the OEM strategy in a big way. It has OEM relationship with 11 players in 7 different countries. This will make it quite easy for ReneSola to offset the anti-dumping and countervailing duties being imposed on Chinese producers by different countries. The company’s asset light strategy is a differentiated business model and should help the company stand in good stead. ReneSola has a good diversified base of customers, with its sales spread across Europe, Japan, USA, China and others. This will help prevent the company from getting impacted by the shocks of major policy changes in some regions. The company has now also increased its shipments to Japan and China, to have a more balance in shipments worldwide.

The company will continue to report good gross margins with its Q2 outlook. ReneSola expects its total solar module shipments to be in the range of 530 MW to 550 MW and its gross margin to be in the range of 15% to 17% for Q3 2014.

Source: ReneSola

The company has returned to the black after a long time. However, the company has got the strategy and experience to be one of the largest players in this segment with sustainable profits.