ReneSola Looks to Beat U.S. Duties
To use OEM partners to ship 500 MW panels to US in 2015; OEM capacity expected to reach 1.2 GW by end of 2014.
Chinese solar panel maker ReneSola Ltd said it would use contract manufacturers across the globe to continue selling panels in the United States, which has imposed anti-dumping duties on solar products made in China and Taiwan.
The United States extended tariffs to Taiwan last month after Chinese companies tried to sidestep the duties by moving the production of cells, which go into their panels, to Taiwan.
ReneSola said on Tuesday that it would use partnerships with original equipment manufacturers (OEM) to supply as much as 500 megawatts (MW) of solar panels to the United States next year.
The company's U.S.-listed shares fell about 4 percent to $2.73 in early trading.
"There is no escaping the fact that making the supply chain more complicated and geographically spread out will raise production costs, but it's almost certainly better than paying tariffs that average 30 percent," Raymond James analyst Pavel Molchanov said.
Other Chinese solar companies may follow in ReneSola's footsteps, analysts said, even if that means higher costs for an industry which returned to profitability only in 2013 after years of margin erosion due to weak panel prices.
ReneSola plans to scale up its OEM partnership capacity to 1.2 gigawatt (GW) by the end of 2014 and 1.5 GW by mid-2015. The company, which has 1.1 GW of solar panel capacity spread across 11 factories in seven countries, said it planned to expand OEM partnerships in India, South Korea, Turkey and parts of Europe.
ReneSola said it would continue to use cells made in Taiwan in products shipped to Europe, where tariffs are imposed only on solar products made in China.
The company's "global-centric business model" would help the company report strong results over the rest of the year, Chief Executive Xianshou Li said in a statement.
ReneSola forecast third-quarter panel shipments of 530-550 MW, higher than the 498.7 MW it shipped in the second quarter.
The company also forecast gross margin of 15-17 percent for the quarter. Margins almost doubled to 14.7 percent in the quarter ended June 30 as in-house polysilicon production helped ReneSola lower costs.
Cost of revenue fell about 5 percent to $330.2 million in the quarter, while revenue rose 2.6 percent to $387.1 million.
Net income attributable to ReneSola shareholders was $757,000, or 1 cent per American depositary share (ADS), in the second quarter, compared with a loss of $21.1 million, or 24 cents per ADS, a year earlier.
By Swetha Gopinath