JA Solar Announces Fourth Quarter and Fiscal Year 2015 Results

JA Solar Holdings Co., Ltd. , one of the world’s largest manufacturers of high-performance solar power products, recentlyannounced its unaudited financial results for its fourth quarter and fiscal year ended December 31, 2015.

Fourth Quarter 2015 Highlights

• Total shipments were 1,366.2 megawatts (“MW”), consisting of 1,297.6 MW of modules and module tolling and 41.2 MW of cells and cell tolling to external customers, and 27.4 MW of modules to the Company’s downstream projects.  Increase of external shipments was +40.5% y/y and +18.8% sequentially.
• Shipments of modules and module tolling were 1,297.6 MW, increases of +47.5% y/y and +20.8% sequentially
• Shipments of cells and cell tolling were 41.2 MW, decreases of 43.6% y/y and 22.3% sequentially
• Net revenue was RMB 4.6 billion ($709.3 million), an increase of +28.5% y/y and +20.3% sequentially
• Gross margin was 17.1%, an increase of 160 basis points y/y and a decrease of 60 basis points sequentially
• Operating profit was RMB 260.1 million ($40.2 million), compared to RMB 222.4 million ($34.3 million) in the fourth quarter of 2014, and RMB 299.1 million ($46.2 million) in the third quarter of 2015
• Net income was RMB 184.9 million ($28.5 million), compared to RMB 166.1 million ($25.6 million) in the fourth quarter of 2014, and RMB 258.6 million ($39.9 million) in the third quarter of 2015
• Earnings per diluted ADS were RMB 3.39 ($0.52), compared to RMB 2.55 ($0.39) in the fourth quarter of 2014, and RMB 4.42($0.68) in the third quarter of 2015
• Cash and cash equivalents were RMB 2.9 billion ($445.1 million), an increase of RMB 1.0 billion ($161.2 million) during the quarter
• Non-GAAP earnings¹ per diluted ADS were RMB 3.14 ($0.49), compared to RMB 1.74 ($0.27) in the fourth quarter of 2014, andRMB 4.35 ($0.67) in the third quarter of 2015

Fiscal Year 2015 Highlights

• Shipments grew to approximately 4.0 gigawatts (“GW”), consisting of 3,672.9 MW of modules and module tolling and 265.0 MW of cells and cell tolling to external customers, and 53.5 MW of modules to the Company’s downstream projects. External Shipments represented an increase of 28.8% from 3.1 GW in fiscal year 2014
• Net revenue was RMB 13.5 billion ($2.1 billion), compared to net revenue of RMB 11.3 billion ($1.7 billion) in fiscal year 2014
• Gross margin was 17.0%, compared to 15.6% in fiscal year 2014
• Operating profit was RMB 865.0 million ($133.5 million), compared to an operating profit of RMB 662.5  million ($102.3 million) in fiscal year 2014
• Net income was RMB 614.5 million ($94.9 million), compared to RMB 446.7 million ($69.0 million) in fiscal year 2014
• Earnings per diluted ADS was RMB 10.58 ($1.63), compared RMB 6.88 ($1.06) in fiscal year 2014
• Cash and cash equivalents at the end of the fiscal year were RMB 2.9 billion ($445.1 million), compared with RMB 2.2 billion ($332.7 million) at the end of fiscal year 2014
• Non-GAAP net income attributable to the Company’s ordinary shareholders was RMB 584.1 million ($90.2 million), compared to a non-GAAP net income attributable to the Company’s ordinary shareholders of RMB 349.8 million ($54.0 million) in fiscal year 2014
• Non-GAAP earnings per diluted ADS in fiscal year 2015 was RMB 9.91 ($1.53), compared to a non-GAAP earnings per diluted ADS of RMB 5.45 ($0.84) in fiscal year 2014

Mr. Baofang Jin, Chairman and CEO of JA Solar, commented, “Our fourth quarter results continued the momentum we built throughout 2015.  We exceeded our operating and financial objectives with shipment and revenue growth of 40.5% and 28.5%, respectively.  We fulfilled strong demand across Asia, especially in China, but also made meaningful advances in North America.  We remain committed to expand our market penetration globally, and have made progress in South, Central, and North America.”

Mr. Jin continued, “Our outlook for 2016 is bright.  We expect growth of over 30%, as countries around the world continue to encourage the growth of clean, renewable energy.  We are able to capture this market growth due to our industry-leading reputation for quality and value.  We intend to aggressively protect that reputation through our ongoing investment in research and marketing. ”

All shipment and financial figures refer to the quarter ended December 31, 2015, unless otherwise specified.  All “year over year” or “y/y” comparisons are against the quarter ended December 31, 2014.  All “sequential” comparisons are against the quarter ended September 30, 2015.

Total shipments were 1,366.2 MW, above the high end of the previously announced guidance of 1,100 to 1,200 MW. External shipments of 1,338.8 MW grew 18.8% sequentially and 40.5% year over year.

Net revenue was RMB 4.6 billion ($709.3 million), an increase of 28.5% y/y and 20.3% sequentially.  Growth was mainly driven by broad-based strength across the Asia Pacific region, further reinforced by strong demand in the United States.

Gross profit of RMB 784.1 million ($121.0 million) increased 41.6% y/y and 15.7% sequentially.  Gross margin was 17.1%, which compares to 15.5% in the year-ago quarter, and 17.7% in the third quarter of 2015. The sequential decrease in gross margin was mainly due to wafer price increase during the quarter.

Total operating expenses of RMB 523.9 million ($80.9 million) were 11.4% of revenue.  This compares to operating expenses of 9.3% of revenue in the year-ago quarter, and 9.9% of revenue in the third quarter of 2015. The sequential increase in operating expense was primarily due to provision of receivables and impairment of certain project assets.

Operating profit was RMB 260.1 million ($40.2 million), compared to RMB 222.4 million ($34.3 million) in the year-ago quarter, and RMB 299.1 million ($46.2 million) in the third quarter of 2015.  Operating margin was 5.7%, compared with 6.2% in the prior year period and 7.8% in the previous quarter.

Interest expense was RMB 66.0 million ($10.2 million), compared to RMB 61.5 million ($9.5 million) in the year-ago quarter, and RMB 58.2 million ($9.0 million) in the third quarter of 2015.

The change in fair value of warrant derivatives was positive RMB 14.0 million ($2.2 million), compared with positive RMB 48.7 million ($7.5 million) in the year-ago quarter, and positive RMB 4.4 million ($0.7 million) in the third quarter of 2015. The warrants were issued on August 16, 2013 in conjunction with the Company’s $96 million registered direct offering.

Earnings per diluted ADS were RMB 3.39 ($0.52), compared to earnings per diluted ADS of RMB 2.55 ($0.39) in the year-ago quarter, and earnings per diluted ADS of RMB 4.42 ($0.68) in the third quarter of 2015.

Fiscal Year 2015 Results

Fiscal year 2015 shipments were 4.0 GW, including 53 MW of modules to the Company’s downstream projects. External shipments of 3.9 GW represented an increase of 28.8% from 3.1 GW in fiscal year 2014.

External shipments breakdown by product (MW)

External shipments breakdown by region (percentage)

Net revenue in fiscal year 2015 was RMB 13.5 billion ($2.1 billion), an increase of 19.7% from RMB 11.3 billion ($1.7 billion) in fiscal year 2014.

Total gross profit in fiscal year 2015 was RMB 2.3 billion ($353.9 million), or 17.0% of net revenue, compared with RMB 1.8 billion ($271.2 million), or 15.6% of net revenue, in fiscal year 2014.

Operating profit in fiscal year 2015 was RMB 865.0 million ($133.5 million), compared with operating profit of RMB 662.5 million ($102.3 million) in fiscal year 2014. In fiscal year 2015, net earnings per diluted ADS was RMB 10.58 ($1.63), compared with net earnings per diluted ADS of RMB 6.88 ($1.06) in fiscal year 2014.

Liquidity

As of December 31, 2015, the Company had cash and cash equivalents of RMB 2.9 billion ($445.1 million), and total working capital of RMB 2.8 billion ($439.9 million).  Total short-term borrowings were RMB 2.2 billion ($338.8 million). Total long-term borrowings were RMB 2.7 billion ($416.7 million), of which RMB 238.4 million ($36.8 million) were due in one year.

Business Outlook

For the first quarter of 2016, the Company expects total cell and module shipments to be in the range of 1,000 to 1,100 MW, including approximately 100 MW of module shipments to the Company’s downstream projects.  Revenues will not be recognized for the modules shipped to the Company’s downstream projects as required by U.S. GAAP.

Full year 2016 shipments are expected to be in the range of 5.2 to 5.5 GW, including 250 to 300 MW of module shipments to the Company’s downstream projects.

Manufacturing Capacity Update

As disclosed in previous quarter, JA Solar is increasing its manufacturing capacity to meet growing demand for its high quality products. The Company now expects to further expand its manufacturing capacity to 2.0 GW for wafers, 5.5 GW for cells, and 5.5 GW for modules by the end of 2016.