ReneSola Ltd Announces Fourth Quarter and Full Year 2007 Result
JIASHAN, China, March 19 /Xinhua-PRNewswire-FirstCall/ -- ReneSola Ltd
("ReneSola" or the "Company"), a leading Chinese manufacturer of solar wafers,
today announced its unaudited financial results for the fourth quarter and
year ended December 31, 2007.
Financial Highlights
-- Fourth quarter 2007 net revenues were US$96.0 million, an increase
of 197.6% from US$32.3 million in the fourth quarter of 2006, and an
increase of 32.4% from US$72.5 million in the third quarter of 2007.
Full year 2007 net revenues were US$249.0 million, an increase of
195.1% from US$84.4 million in the full year 2006.
-- Fourth quarter 2007 net income was US$17.5 million, an increase of
87.8% from US$9.3 million in the fourth quarter of 2006, and an
increase of 36.8% from US$12.8 million in the third quarter of 2007.
Full year 2007 net income was US$42.9 million, an increase of 69.7%
from US$25.3 million in the full year 2006.
-- Fourth quarter 2007 basic and diluted earnings per share were
US$0.17 and US$0.17, respectively, and basic and diluted earnings
per ADS were US$0.34 and US$0.34, respectively. Full year 2007 basic
and diluted earnings per share were US$0.43 and US$0.43,
respectively, and basic and diluted earnings per ADS were US$0.86
and US$0.86, respectively. Each ADS represents two shares.
Business Highlights
-- Fourth quarter production output was 51.3 MW, an increase of 42.5%
from 36.0 MW in the third quarter. Full year production output was
125.6 MW, an increase of 223% from 38.9 MW in the full year 2006,
exceeding the top end of guidance.
-- Successfully executed 2007 capacity expansion target with additional
40 monocrystalline furnaces and 17 multicrystalline furnaces
installed during the fourth quarter of 2007, bringing total ingot
manufacturing capacity to 378 MW and wafer manufacturing capacity to
305 MW, compared with 80 MW of ingot manufacturing capacity as of
the end of 2006.
-- Over 90% of raw materials required for 2008 planned production
output of 300 MW have been secured through a combination of
long-term and short-term procurement contracts, toll arrangements,
and expected output from our polysilicon joint venture in Henan
Province, China.
-- Joint venture in Henan Province, China successfully commenced trial
production of polysilicon, and development of wholly-owned green
field polysilicon plant in Sichuan Province, China is on track with
trial production of this facility expected to begin during the first
half of 2009.
Six Three Twelve Six Three Three Twelve
months months months months months months months
ended ended ended ended ended ended ended
6/30 12/31 12/31 6/30 9/30 12/31 12/31
2006 2006 2006 2007 2007 2007 2007
Net revenue
(US$000) 24,042 32,272 84,371 80,387 72,540 96,046 248,973
Gross profit
(US$000) 7,171 8,878 24,725 18,102 15,775 19,619 53,496
Gross margin (%) 29.8% 27.5% 29.3% 22.5% 21.7% 20.4% 21.5%
Operating profit
(US$000) 6,394 8,029 22,235 15,001 13,432 15,000 43,433
Foreign exchange (9) 141 364 (2,304) (569) (1,174) (4,047)
gain (loss)
(US$000)
Profit for the
period (US$000) 7,039 9,303 25,301 12,690 12,775 17,471 42,936
Production output
(MW) 10.0 15.7 38.9 38.3 36.0 51.3 125.6
"During 2007 ReneSola grew into a leading producer of solar wafers and our
business expanded through upstream integration within the solar value chain
into polysilicon manufacturing," said Mr. Xianshou Li, ReneSola's Chief
Executive Officer. "As one of the fastest growing solar companies in the world,
ReneSola achieved substantial top line growth without sacrificing
profitability in spite of a significant increase in raw material costs, as
demand for wafers, as well as average wafer selling prices, continued to
increase. We also successfully executed our growth plan by expanding our raw
material procurement and customer network and increasing our total production
capacity from 80 MW as of the end of 2006, to 378 MW as of the end of 2007."
"During the year we also took strategic steps to integrate upstream into
polysilicon manufacturing. Our joint venture in Henan Province, China
commenced polysilicon trial production in mid-January 2008, and the
development of our state-of-the-art green field polysilicon project in Sichuan
Province, China is on track. In line with ReneSola's strong commitment to
maintaining environmentally responsible business practices, the joint venture
in Henan Province has met the environmental protection standards set by the
government and is equipped to recycle silicon tetrachloride. The polysilicon
project in Sichuan Province will utilize proven, high-end equipment with fully
closed loop systems to recycle and convert waste into products that can be
reused in the production process."
"In 2008, we will maintain our focus on efficient cost production and
innovation as we look to build on ReneSola's strong brand name. New equipment
using our proprietary technologies and state-of-the-art facilities will
include some of the most advanced furnaces and wire saws in the market. We are
confident that our expansion efforts and upstream transition into polysilicon
manufacturing, paired with a strong feedstock supply pipeline and a customer
base of leading industry players, put ReneSola in a unique position to
capitalize on the opportunities presented by a rapidly growing solar industry
in 2008 and beyond."
Financial Results for the Fourth Quarter and Full Year 2007
Net revenues
Net revenues for the fourth quarter of 2007 were US$96.0 million, an
increase of 32.4% sequentially and 197.6% year-over-year. For the full year
2007, ReneSola reported net revenues of US$249.0 million representing a 195.1%
increase year-over-year from US$84.4 million in 2006. The rise in fourth
quarter and full year 2007 revenues was primarily attributable to an increase
in output from the expanded production capacity and increasing wafer ASPs.
Gross profit
Fourth quarter gross profit was US$19.6 million, a 24.4% increase
sequentially and 121.0% year-over-year. The gross margin for the fourth
quarter was 20.4% compared to 21.7% in the third quarter of 2007. Full year
2007 gross profit was US$53.5 million, a 116.4% increase year-over-year from
US$24.7 million in 2006. The gross margin for full year 2007 was 21.5%
compared to 29.3% for the full year 2006. The change in gross margin was
primarily attributable to increases in average feedstock costs of 13.7%
sequentially and 42.1% year-over-year. Increasing feedstock costs were
mitigated by a reduction in silicon consumption through a combination of in-
house closed-loop scrap recycling, productivity gains from improvements in
wafer slicing, a reduction in non-raw material related production costs and
increases in wafer ASPs.
Operating profit
Operating profit in the fourth quarter of 2007 was US$15.0 million, an
increase of 11.7% sequentially and 86.8% year-over-year. Operating margin was
15.6% in the fourth quarter compared to 18.5% in the third quarter of 2007.
Total operating expenses in the fourth quarter of 2007 were US$4.6 million, up
from US$2.3 million in the third quarter of 2007. Of the total operating
expenses in the fourth quarter US$0.7 million was attributable to share-based
compensation expenses.
Operating profit for the full year 2007 was US$43.4 million, a 95.3%
increase year-over-year from US$22.2 million in 2006. Operating margin was
17.4% for the full year 2007 compared to 26.4% in the previous year due to the
lower gross margin attributable to the significant increase in raw material
costs. Total operating expenses increased to US$10.l million for the full year
2007 from US$2.5 million for the full year 2006. This was primarily due to
increased general and administrative expenses and R&D costs reflecting higher
salary and benefit payments as a result of the need for a greater number of
employees to meet our fast growing business, as well as an increase in
professional fees and compliance expenses.
Profit before tax
Profit before tax in the fourth quarter was US$12.4 million, a 3.6%
increase sequentially and 49.3% increase year-over-year. Finance costs
increased by 13.9% sequentially, reflecting increased bank borrowings and
interest rates. Finance costs as a percentage of net revenue decreased from
2.0% in the third quarter of 2007 to 1.8% in the fourth quarter of 2007. The
fourth quarter foreign exchange loss increased to US$1.2 million from US$0.6
million in the third quarter as a result of appreciation of RMB against the US
dollar during the quarter.
Profit before tax for the full year 2007 was US$36.8 million, an increase
of 63.0% year-over-year from US$22.6 million in 2006. Finance costs in 2007
increased to US$4.5 million from US$0.3 million in 2006, reflecting increased
bank borrowings and the convertible bonds issued in March 2007. The full year
2007 foreign exchange loss was US$4.0 million from a gain of US$0.4 million in
the previous year due to appreciation of RMB against the US dollar.
Taxation
ReneSola's subsidiary, Zhejiang Yuhui Solar Energy Source Co. Ltd,
("Zhejiang Yuhui") recognized a tax benefit of US$5.2 million in the fourth
quarter of 2007, significantly up from US$0.8 million in the third quarter of
2007. For the full year 2007, Zhejiang Yuhui recognized a tax benefit of
US$6.2 million, up from US$2.7 million in 2006, due to an increase in domestic
equipment purchases. In accordance with PRC tax regulations, Zhejiang Yuhui
received 40% of the amount arising from the purchase of domestic made
equipment as an investment tax credit. The tax credit can be carried forward
for 7 years to offset future corporate income taxes.
Net profit
Fourth quarter 2007 net profit increased 36.8% sequentially and 87.8%
year-over-year to US$17.5 million. Full year 2007 net profit increased 69.7%
year-over-year to US$42.9 million due to an increase in production output and
improved productivity.
2008 Guidance
In the first quarter of 2008 we expect our gross margin to remain stable
and expected production output to be 62 MW, as compared to 51.3 MW in the
fourth quarter of 2007 and 15.3 MW in the first quarter of 2007. We maintain
our annualized ingot production capacity target of 645 MW by the end of 2008.
We anticipate production output of a minimum of 300 MW in 2008 with minimum
annual net revenues of US$480 million. This represents year-over-year revenue
growth of at least 93%.
Accounting Standards
The financial information presented in this announcement has been prepared
in accordance with Generally Accepted Accounting Principles in the United
States ("US GAAP"). The Company has historically issued financial information
prepared in accordance with International Financial Reporting Standards
("IFRS"). For the purposes of comparison, financial information for the year
ended December 31, 2006 and six months ended June 30, 2006 and 2007, which was
previously issued in accordance with IFRS, is presented in this announcement
in accordance with US GAAP.
Conference Call Information
ReneSola's management will host an earnings conference call on March 19,
2008 at 8 AM U.S. EDT / 8 PM Beijing/Hong Kong time / 12 PM GMT.
Dial-in details for the earnings conference call are as follows:
U.S. & International: +1-617-614-2705
United Kingdom: +44-207-365-8426
Hong Kong: +852-3002-1672
Please dial in 10 minutes before the call is scheduled to begin and
provide the passcode to join the call. The passcode is "ReneSola Call." There
will also be a presentation available on the Company's website at
http://www.renesola.com .
A replay of the conference call may be accessed by phone at the following
number until March 26, 2008:
International: +1-617-801-6888
Passcode: 34290815
About ReneSola
ReneSola Ltd ("ReneSola") is a leading solar wafer manufacturer based in
China. Capitalizing on proprietary technologies and technical know-how,
ReneSola manufactures monocrystalline and multicrystalline solar wafers. In
addition, ReneSola strives to enhance its competitiveness through upstream
integration into virgin polysilicon manufacturing. ReneSola possesses a global
network of suppliers and customers that include some of the leading global
manufacturers of solar cells and modules. ReneSola's shares are currently
traded on the New York Stock Exchange (NYSE: SOL) and the AIM of the London
Stock Exchange (AIM: SOLA.L). For more information about ReneSola, please
visit http://www.renesola.com .
Safe Harbor Statement
This press release contains statements that constitute "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
and as defined in the U.S. Private Securities Litigation Reform Act of 1995.
Whenever you read a statement that is not simply a statement of historical
fact (such as when we describe what we "believe," "expect" or "anticipate"
will occur, what "will" or "could" happen, and other similar statements), you
must remember that our expectations may not be correct, even though we believe
that they are reasonable. We do not guarantee that the forward-looking
statements will happen as described or that they will happen at all. Further
information regarding risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements is included
in our filings with the U.S. Securities and Exchange Commission, including our
registration statement on Form F-1. We undertake no obligation, beyond that
required by law, to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made, even though our
situation may change in the future.
Consolidated Income Statement
Six Three Twelve
months ended months ended months ended
June 30, December 31, December 31,
2006 2006 2006
US$000 US$000 US$000
Net revenue 24,042 32,272 84,371
Cost of sales (16,871) (23,394) (59,646)
Gross profit 7,171 8,878 24,725
Operating expenses:
Sales and marketing (204) (85) (335)
General and administrative (565) (767) (2,284)
R&D Expense (22) (11) (39)
Other expenses, net 14 14 168
Total operating expenses (777) (849) (2,490)
Income from operations 6,394 8,029 22,235
Interest income 6 163 312
Interest expenses (103) (53) (331)
Foreign exchange (loss) gain (9) 141 364
Total non-operating (expenses)
income (106) 251 345
Income before income tax expenses 6,288 8,280 22,580
Income tax benefit 751 1,023 2,721
Minority interest 0 0 0
Net income 7,039 9,303 25,301
Consolidated Income Statement
Three Three Twelve
months months months
Six months ended ended ended ended
June 30, September December December
2007 30, 2007 31, 2007 31, 2007
US$000 US$000 US$000 US$000
Net revenue 80,387 72,540 96,046 248,973
Cost of sales (62,285) (56,765) (76,427) (195,477)
Gross profit 18,102 15,775 19,619 53,496
Operating expenses:
Sales and marketing (263) (152) (169) (584)
General and administrative (2,765) (2,354) (3,635) (8,754)
R&D Expense (163) (82) (898) (1,143)
Other expenses, net 90 245 83 418
Total operating expenses (3,101) (2,343) (4,619) (10,063)
Income from operations 15,001 13,432 15,000 43,433
Interest income 1,154 551 229 1,934
Interest expenses (1,338) (1,484) (1,690) (4,512)
Foreign exchange (loss) gain (2,304) (569) (1,174) (4,047)
Total non-operating (expenses)
income (2,488) (1,502) (2,635) (6,625)
Income before income tax expenses 12,513 11,930 12,365 36,808
Income tax benefit 177 807 5,171 6,155
Minority interest 0 (38) 65 27
Net income 12,690 12,775 17,471 42,936
Consolidated Balance Sheet
As at As at As at As at
June 30, December June 30, December
2006 31, 2006 2007 31, 2007
US$000 US$000 US$000 US$000
ASSETS
Current assets:
Cash and cash equivalents 6,714 9,862 67,904 53,137
Accounts receivable, net of allowances
for doubtful receivables 50 694 461 8,755
Inventories 18,581 44,775 75,325 110,630
Advances to suppliers 8,335 16,952 33,777 53,727
Amounts due from related parties 2,032 5,766 10,502 17,213
Value added tax recoverable 2,494 5,017 7,757 117
Prepaid expenses and other current
assets 1,989 2,978 9,428 9,654
Deferred tax assets 1,364 3,321 3,868 10,487
Total current assets 41,559 89,365 209,022 263,720
Property, plant and equipment, net 8,384 19,908 50,046 136,598
Prepaid land rent, net 1,142 4,254 7,288 7,502
Deferred tax assets 16 102 27 284
Deferred convertible bond issue costs -- -- 3,921 3,336
Advances for purchases of property,
plant and equipment 2,407 14,957 37,931 29,648
Total assets 53,508 128,586 308,235 441,088
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current liabilities:
Short-term borrowings 10,314 14,675 58,930 71,691
Accounts payable 2,848 4,902 5,684 13,147
Advances from customers 29,731 34,452 25,866 59,626
Amounts due to related parties 3,131 606 228 -
Other current liabilities 879 1,347 3,117 13,912
Total current liabilities 46,903 55,982 93,825 158,376
Accrued warranty costs 62 63 65 67
Convertible bond payable -- -- 122,306 128,265
Long-term borrowings -- -- 4,727 17,797
Derivative liability -- -- -- 546
Deferred tax liability -- -- -- 633
Total liabilities 46,965 56,045 220,923 305,684
Minority interest -- -- -- 9,696
Shareholders' equity
Common shares -- 36,266 36,266 36,266
Additional paid-in capital 1,500 11,765 11,928 14,827
Retained earnings 5,002 23,264 35,954 66,200
Accumulated other comprehensive income 41 1,246 3,164 8,415
Total shareholders' equity 6,543 72,541 87,312 125,708
Total liabilities and shareholders'
equity 53,508 128,586 308,235 441,088
Consolidated Cash Flow Statement
Three Twelve
months months
Six months ended ended ended
June 30, December 31, December 31,
2006 2006 2006
US$000 US$000 US$000
Cash flows from operating activities:
Net income 7,038 9,303 25,301
Adjustments for:
Minority interest -- -- --
Depreciation 161 357 733
Amortization of deferred convertible
bond issue costs -- -- --
Recognition of bond redemption
premium -- -- --
Allowances for doubtful receivables 26 39 66
Prepaid land rent expensed 3 22 32
Derivatives -- -- --
Deferred taxes (751) (1,023) (2,721)
Share-based compensation -- 74 264
Changes in operating assets and
liabilities:
Accounts receivable 111 431 (557)
Inventories (15,365) (18,584) (40,591)
Advances to suppliers (7,195) (2,725) (15,559)
Amounts due from related parties (1,357) 1,772 (4,967)
Value added tax recoverable (1,883) (1,483) (4,296)
Prepaid expenses and other current
assets (1,477) 4,105 (2,400)
Prepaid land rent (962) (1,227) (4,036)
Accounts payable 1,247 1,334 3,195
Advances from customers 25,272 (763) 29,200
Other current liabilities 386 338 817
Accrued warranty costs 20 -- 20
Net cash provided by (used in)
operating activities 5,274 (8,030) (15,499)
Cash flows from investing activities:
Purchases of property, plant and
equipment (5,963) (5,449) (17,606)
Advances for purchases of property,
plant and equipment (2,360) (10,898) (14,598)
Cash provided to related parties -- -- --
Net cash used in investing activities (8,323) (16,347) (32,204)
Cash flows from financing activities:
Contribution from minority
shareholder of subsidiaries -- -- --
Net proceeds from short-term
borrowings 9,625 1,540 13,747
Proceeds from issuance of common
shares -- -- 50,000
Share issuance costs -- -- (3,734)
Net proceeds from issuance of
convertible bonds -- -- --
Proceeds from capital contribution -- -- --
Distribution in respect of
reorganization (2,878) -- (2,878)
Other distribution to shareholders (331) -- (331)
Cash received from related parties 3,682 594 1,270
Cash paid to related parties (730) -- (856)
Net cash provided by financing
activities 9,368 2,134 57,218
Effect of exchange rate changes (9) (170) (57)
Net increase (decrease) in cash and
cash equivalents 6,310 (22,413) 9,458
Cash and cash equivalents, beginning
of year 404 32,275 404
Cash and cash equivalents, end of
year 6,714 9,862 9,862
Consolidated Cash Flow Statement
Three Three Twelve
months months months
Six months ended ended ended ended
June 30, September December December
2007 30, 2007 31, 2007 31, 2007
US$000 US$000 US$000 US$000
Cash flows from operating activities:
Net income 12,690 12,775 17,471 42,936
Adjustments for:
Minority interest -- (38) 65 27
Depreciation 1,223 1,214 1,733 4,170
Amortization of deferred convertible
bond issue costs 371 362 367 1,100
Recognition of bond redemption
premium 353 367 361 1,081
Allowances for doubtful receivables 88 3 378 469
Prepaid land rent expensed 55 46 46 147
Derivatives -- -- 525 525
Deferred taxes (379) (809) (5,029) (6,217)
Share-based compensation 164 95 670 929
Changes in operating assets and
liabilities:
Accounts receivable 195 (4,994) (3,040) (7,839)
Inventories (29,042) (17,774) (13,621) (60,437)
Advances to suppliers (16,220) (238) (17,818) (34,276)
Amounts due from related parties (4,529) (3,396) 991 (6,934)
Value added tax recoverable (2,649) 3,790 3,899 5,040
Prepaid expenses and other current
assets (6,260) (5,512) 5,211 (6,561)
Prepaid land rent (2,941) (19) (25) (2,985)
Accounts payable 650 3,988 2,960 7,598
Advances from customers (9,334) 8,973 22,259 21,898
Other current liabilities 362 145 3,631 4,138
Accrued warranty costs -- -- -- --
Net cash provided by (used in)
operating activities (55,203) (1,022) 21,034 (35,191)
Cash flows from investing activities:
Purchases of property, plant and
equipment (29,107) (33,421) (35,341) (97,869)
Advances for purchases of property,
plant and equipment (22,293) 15,119 (5,947) (13,121)
Cash provided to related parties -- -- (3,680) (3,680)
Net cash used in investing activities (51,400) (18,302) (44,968) (114,670)
Cash flows from financing activities:
Contribution from minority
shareholder of subsidiaries -- 361 -- 361
Net proceeds from short-term
borrowings 47,957 16,646 6,292 70,895
Proceeds from issuance of common
shares -- -- -- --
Share issuance costs -- -- -- --
Net proceeds from issuance of
convertible bonds 115,771 -- -- 115,771
Proceeds from capital contribution -- 2,133 -- 2,133
Distribution in respect of
reorganization -- -- -- --
Other distribution to shareholders -- -- -- --
Cash received from related parties -- (1) 111 110
Cash paid to related parties (388) (225) (120) (733)
Net cash provided by financing
activities 163,340 18,914 6,283 188,537
Effect of exchange rate changes 1,305 1,441 1,853 4,599
Net increase (decrease) in cash and
cash equivalents 58,042 1,031 (15,798) 43,275
Cash and cash equivalents, beginning
of year 9,862 67,904 68,935 9,862
Cash and cash equivalents, end of
year 67,904 68,935 53,137 53,137
For investor and media inquiries, please contact:
In China:
Mr. Charles Bai
ReneSola Ltd
Tel: +86-573-8477-3061
Email: charles.bai@renesola.com
Mr. Derek Mitchell
Ogilvy Public Relations Worldwide (Beijing)
Tel: +86-10-8520-6284
Email: derek.mitchell@ogilvy.com
In the United States:
Mr. Jeremy Bridgman
Ogilvy Public Relations Worldwide (New York)
Tel: +1-212-880-5363
Email: jeremy.bridgman@ogilvypr.com
In the UK:
Mr. Tim Feather/Mr. Richard Baty
Hanson Westhouse Limited
Tel: +44-20-7601-6100
Email: tim.feather@hansonwesthouse.com
richard.baty@hansonwesthouse.com
Mr. Charles Ryland/Ms. Suzanne Brocks/Ms. Catherine Breen
Buchanan Communications
Tel: +44-20-7466-5000
SOURCE ReneSola Ltd
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