After coming down on 2 news reports, this came out and really jolted it today!:
/ C O R R E C T I O N -- Yingli Green Energy Holding Company Limited /
10:02a ET May 22, 2009 (
PR NewsWire)
Yingli Green Energy Holding Company Limited (NYSE: YGE) ("Yingli Green Energy" or the "Company"), one of the world's leading vertically integrated photovoltaic ("PV") product manufacturers, today announced its unaudited consolidated financial results for the first quarter ended March 31, 2009.
First Quarter 2009 Consolidated Financial and Operating Highlights -- Total net revenues were RMB 999.9 million (US$146.3 million). -- Gross profit was RMB 152.5 million (US$22.3 million) and gross margin was 15.3%. -- Operating income was RMB 20.4 million (US$3.0 million) and operating margin was 2.0%. -- Net loss(1) was RMB 141.6 million (US$20.7 million) and diluted loss per ordinary share and per American depositary share ("ADS") was RMB 1.11(US$0.16). -- On an adjusted non-GAAP(2) basis, net loss(1) was RMB 77.1 million (US$11.3 million) and diluted loss per ordinary share and per ADS was RMB 0.61 (US$0.09).
"Due to weakened macroeconomic conditions globally, including tighter credit for PV system project financing, worse than normal winter weather conditions in Germany and changes in the feed-in tariff policy in Spain, we experienced a tough quarter," said Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. "However, our continued research and development efforts and ability to renegotiate polysilicon supply contracts allowed us to expand our gross margin by 2.1% quarter-over-quarter."
"We are pleased that PV-industry veteran Dr. Dengyuan Song joined Yingli in February as our new chief technology officer. With Dr. Song at the helm, we have seen continued enhancement of our research and development capability and operating efficiency. In addition, we recently signed a strategic cooperation agreement with a prestigious energy research center based in Europe, which we believe will help us enhance our cell efficiency rate and research and development capability. We expect that as our cell efficiency continues to improve through this project, our gross margin will expand further in the medium term."
"We currently have access to up to RMB 6.4 billion in credit from domestic and international banks and have successfully secured additional lines of credit. We believe our healthy capital position demonstrates lenders' confidence in our value proposition and growth potential and allows us to focus on our execution plans."
"We believe that the first quarter marked a low point for the entire solar industry this year, Yingli Green Energy included. However, recent gradual recovery in major markets, especially in Germany, combined with encouraging government policies towards alternative energy in the United States and China, gives us reasons to remain confident in the future of the global solar market," continued Mr. Miao. "We have strategies in place in both developed and emerging solar markets that we expect to help us leverage our cost- competitive business model to expand market share. In Germany and other European countries, we are utilizing our existing strong sales capacity to broaden our sales channels and further diversify our customer mix. In the United States, to take advantage of increasing government support for alternative energy, we have entered into cooperation with key U.S. solar players, including an exclusive supplier framework agreement with AES Solar Energy Ltd., an affiliate of AES Corporation, for its solar projects in major PV markets. Also during the first quarter, we established our U.S. subsidiary, which will be led by Robert Petrina, our U.S. Managing Director and an eight- year solar industry veteran. Under Mr. Petrina's direction we are taking steps towards opening sales centers on the East and West coasts of the United States. In China, exciting developments are taking place in the solar market following the government's recently announced solar subsidy program. We first entered the Chinese domestic PV system installation market in 2002, and we believe our global experience combined with our existing capabilities and on-the-ground network in China, as well as our strong government relationships give us a unique opportunity to gain market share in the rapidly growing Chinese solar market."
"To compliment these strategies, we recently became a member of PV CYCLE, a Brussels-based organization that promotes voluntary take-back and recycling of end-of-life PV modules. We are very proud that Yingli Green Energy is the first China-based company to join PV CYCLE; I believe that this membership speaks to our commitment to reducing the environmental impact of PV production and the development of a sustainable solar industry," Mr. Miao continued.
"We are an industry leader in non-silicon production costs. As declining spot prices for polysilicon continue to cause an industry-wide decline in cost of polysilicon as a percentage of total costs of PV products, we aim to leverage our competitive cost structure to further drive gross margins and gain additional market share. Combined with our vertically integrated business model and low cost, high quality offerings, this gives us great confidence that Yingli Green Energy will continue to be a leader in the rapidly growing global solar market," Mr. Miao concluded.
First Quarter 2009 Financial Results
Total Net Revenues
Total net revenues were RMB 999.9 million (US$146.3 million) in the first quarter of 2009, a decrease of 43.2% from RMB 1,761.2 million in the fourth quarter of 2008 and a decrease of 37.3% from RMB 1,595.0 million in the first quarter of 2008. The decrease from the fourth quarter of 2008 was primarily due to substantial lower shipment volume and lower average selling price, which were impacted by weaker demand resulting from difficult macroeconomic conditions globally, including tighter credit for PV system project financing, worse than normal winter weather conditions in Germany and changes in the feed-in tariff policy in Spain. Furthermore, as close to half of the Company's PV module shipments were under contracts denominated in Euros, average selling price was also negatively impacted by the depreciation of the Euro against the Renminbi in the first quarter of 2009.
Gross Profit and Gross Margin
Gross profit in the first quarter of 2009 was RMB 152.5 million (US$22.3 million), a decrease of 34.5% from RMB 232.9 million in the fourth quarter of 2008 and a decrease of 61.1% from RMB 392.3 million in the first quarter of 2008. Gross margin was 15.3% in the first quarter of 2009, up from 13.2% in the fourth quarter of 2008 and down from 24.6% in the first quarter of 2008. The increase in gross margin from the fourth quarter of 2008 was primarily due to the decrease in unit cost of blended polysilicon in the first quarter of 2009 caused primarily by lower prices of polysilicon purchased in the spot market and under our long term polysilicon supply contracts, as well as lower polysilicon usage per watt achieved through the Company's continued research and development efforts, which was partially offset by the decline in average selling price resulting from weakened macroeconomic conditions and the depreciation of the Euro against the Renminbi.
Operating Expenses
Operating expenses in the first quarter of 2009 were RMB 132.1 million (US$19.3 million), compared to RMB 135.1 million in the fourth quarter of 2008 and RMB 109.6 million in the first quarter of 2008. The decrease in operating expenses compared to the fourth quarter of 2008 was primarily attributable to the better control of sales and marketing related expenses, partially offset by higher research and development expenses. Operating expenses as a percentage of total net revenues increased to 13.2% in the first quarter of 2009 from 7.7% in the fourth quarter of 2008 and 6.9% in the first quarter of 2008, mainly due to the decrease in total net revenues.
Operating Income and Margin
Operating income in the first quarter of 2009 was RMB 20.4 million (US$3.0million), a decrease of 79.2% from RMB 97.8 million in the fourth quarter of 2008 and a decrease of 92.8% from RMB 282.7 million in the first quarter of 2008. Operating margin decreased to 2.0% in the first quarter of 2009 from 5.6% in the fourth quarter of 2008 and 17.7% in the first quarter of 2008.
Interest Expense
Interest expense was RMB 79.0 million (US$11.6 million) in the first quarter of 2009, compared to RMB 51.7 million(3) in the fourth quarter of 2008 and RMB 37.7 million(3) in the first quarter of 2008. The increase in interest expense was consistent with both the increase in long-term bank borrowings from RMB 663.0 million as of December 31, 2008 to RMB 1,172.4 million (US$171.6 million) as of March 31, 2009 and the increase in short-term borrowings from RMB 2,044.2 million as of December 31, 2008 to RMB 2,601.9 million (US$380.8 million) as of March 31, 2009. The weighted average interest rate for these borrowings in the first quarter of 2009 was 7.97%, which increased from 7.68% in the fourth quarter of 2008.
Foreign Currency Exchange Loss (Gain)
Foreign currency exchange loss was RMB93.6 million (US$13.7 million) in the first quarter of 2009, compared to a foreign currency exchange gain of RMB 68.7 million in the fourth quarter of 2008 and a foreign currency exchange gain of RMB 66.3 million in the first quarter of 2008. The Euro depreciated approximately 6.5% against the Renminbi in the first quarter of 2009, compared to an approximately 3.4% depreciation of Euro against the Renminbi in the fourth quarter of 2008, which resulted in a loss upon the revaluation of accounts receivables and raw material prepayments denominated in Euro at the end of the quarter. The foreign currency exchange gain in the fourth quarter of 2008 despite of the Euro depreciation was primarily due to a substantial gain resulting from foreign currency forward contracts that was realized in the fourth quarter 2008
Income Tax Benefit
Income tax benefit was RMB 13.0 million (US$1.9 million) in the first quarter of 2009, compared to RMB 3.1 million(4) in the fourth quarter of 2008 and RMB 0.7 million in the first quarter of 2008. The income tax benefit in the first quarter of 2009 was primarily the result of a deferred tax benefit recognized in connection with the net operating losses incurred in the quarter, while the income tax benefit in the fourth quarter of 2008 was primarily due to an increase of deferred tax assets related to accrued warranty. Under the Enterprise Income Tax Law and the various implementation rules, Tianwei Yingli was subject to an enterprise income tax rate of 0% in 2008 and 12.5% for 2009.
Net Income (Loss)
As a result of the factors discussed above, net loss(1) was RMB 141.6 million (US$20.7 million) in the first quarter of 2009, compared to net income(1) of RMB 82.0 million in the fourth quarter of 2008 and net income(1) of RMB 220.2 million in the first quarter of 2008. Diluted loss per ordinary share and per ADS was RMB 1.11 (US$0.16) in the first quarter of 2009, compared to diluted earnings per ordinary share and per ADS of RMB 0.64 in the fourth quarter of 2008.
On an adjusted non-GAAP basis, which excludes share-based compensation, accretion of the non-cash interest expense resulting from the derivative liability bifurcated from our convertible notes issued in January 2009 and from the equity component bifurcated from our convertible notes issued in December 2007 upon the adoption of FSP APB14-1, respectively, and the subsequent change in the fair value of the derivative liability and amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Tianwei Yingli, an operating subsidiary of the Company, adjusted non-GAAP net loss(1) was RMB 77.1 million (US$11.3 million) in the first quarter of 2009, compared to adjusted non-GAAP net income(1) of RMB 111.4 million in the fourth quarter of 2008. Adjusted non-GAAP diluted loss per ordinary share and per ADS was RMB 0.61 (US$0.09) in the first quarter of 2009, compared to adjusted non-GAAP diluted earnings per ordinary share and per ADS of RMB 0.86 in the fourth quarter of 2008.
Balance Sheet Analysis
As of March 31, 2009, Yingli Green Energy had RMB 1,059.7 million (US$155.1 million) in cash and RMB 2,780.4 million (US$406.9 million) in working capital, compared to RMB 1,108.9 million in cash and RMB 3,231.7 million in working capital as of December 31, 2008. Prepayment to suppliers decreased from RMB 774.0 million as of December 31, 2008 to RMB 453.1 million (US$66.3 million) as of March 31, 2009 as a result of utilization of prepayments in the previous quarter and favorable changes to the payment schedules for polysilicon procurement. Long-term bank borrowings increased to RMB 1,172.4 million (US$171.6 million) as of March 31, 2009 from RMB 663.0 million as of December 31, 2008 and short-term borrowings increased to RMB 2,601.9 million (US$380.8 million) as of March 31, 2009 from RMB 2,044.2 million as of December 31, 2008. As of the date of this press release, the Company had approximately RMB 6,405 million in authorized lines of credit, of which RMB 4,683 million had been utilized.
Note Regarding Senior Secured Convertible Notes due 2012 Issued to Trustbridge
Yingli Green Energy entered into a note purchase agreement with Trustbridge, an affiliate of Gold Sight International Limited ("Gold Sight"), the former minority shareholder of Cyber Power, for up to US$50.0 million in Notes, US$20.0 million of which has been issued, to fund the acquisition of Cyber Power Group Limited ("Cyber Power"). In January 2009, the Company issued the first tranche of the Notes in the principal amount of US$20.0 million, In the first quarter of 2009, the Company recorded an interest expense and a derivative liability loss relating to the first tranche of the Notes in the principal amount of US$20.0 million. The interest expense is amortized over the term of the Notes. Such interest expense and derivative liability are non-cash charges and will not impact our cash flow. If the conversion price of the Notes remains substantially below the market price at the time of the issuance of the remaining Notes, the Company will be required to account for the difference as an interest expense, which would have a material adverse effect on our results for the relevant period. In addition, the Company will be required to account for any derivative liability gain or loss relating to the outstanding Notes, which would also have a material effect on our results for the relevant period.
First Quarter 2009 and Recent Business Highlights Sales -- Yingli Green Energy entered into a sales contract with GOLDBECK Solar GmbH, under which Yingli Green Energy is expected to supply a minimum of 15 MW and potentially up to 58 MW of PV modules to GOLDBECK Solar in 2009. -- Yingli Green Energy entered into a three-year exclusive supplier framework agreement with AES Solar Energy Ltd, a leading global developer, owner and operator of utility-scale solar plants, for its solar projects in major PV markets. Financing -- Three of Yingli Green Energy's PRC subsidiaries received new short-term loans totaling RMB 420 million from domestic banks and Baoding Yingli Group Company Limited ("Yingli Group"), an affiliate of the Company. -- Yingli Group entered into a strategic cooperation agreement with the Hebei Branch of Bank of China, under which the Bank of China expects to grant, subject to internal procedures to be conducted in accordance with the bank's risk management and operational regulations, credit facilities in a maximum amount of RMB 6 billion to entities affiliated with Yingli Group, including three PRC subsidiaries of Yingli Green Energy. -- Yingli Green Energy drew down the US$50 million under the three-year loan facility provided by a fund managed by Asia Debt Management Hong Kong Limited ("ADM Capital"). -- Yingli Green Energy renewed and enlarged credit lines in an aggregate amount of RMB 1.1 billion with the Export-Import Bank of China, a government policy bank of China's central government. Others -- The Chief Financial Officer Mr. Zongwei Li was appointed to the Company's board of directors and Professor Ming Huang to the board's audit committee; and Mr. George Jian Chuang resigned from the Company's board. -- Yingli Green Energy became the first China-based company to join PV CYCLE, a Brussels-based organization that promotes voluntary take-back and recycling of end-of-life PV modules.
Business Outlook for Full Year 2009
Based on current market and operating conditions, estimated production capacity and forecasted customer demand, as well as current exchange rates for the U.S. dollar, Euro and Renminbi, the Company is updating its PV module shipment target to be in the estimated range of 450 MW to 500 MW for fiscal year 2009, which represents an increase of 59.9 % to 77.6 % compared to fiscal year 2008, subject to, among other factors, the successful installation and ramp-up of the Company's additional 200 MW planned expansion in the third quarter of 2009.
In addition, after taking into consideration the negative impact of expected decreases in the average selling price of PV modules and further depreciation of the Euro against the U.S. dollar, the Company currently expects that its gross margin target for fiscal year 2009 to be in the estimated range of 23 % to 25 %.
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with generally accepted accounting principals in the United States, or GAAP, this press release includes certain non-GAAP financial measures of adjusted net income (loss)(1) and adjusted diluted earnings (loss) per ordinary share and per ADS, each of which is adjusted to exclude items related to share-based compensation, accretion of the non-cash interest expense resulting from the derivative liability bifurcated from our convertible notes issued in January 2009 and from the equity component bifurcated from our convertible notes issued in December 2007 upon the adoption of FSP APB14-1, respectively, and the subsequent change in the fair value of the derivative liability and amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Tianwei Yingli, an operating subsidiary of the Company. The Company believes excluding these items from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such items are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP. For a reconciliation of each of these non- GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial information included elsewhere in this press release.
Currency Convenience Translation
Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB 6.8329 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of March 31, 2009. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollar amounts at such rate, or at any other rate. The percentages stated in this earnings release are calculated based on Renminbi.
Conference Call
Yingli Green Energy will host a conference call and live webcast to discuss the results at 8:00 AM Eastern Daylight Time (EDT) on Friday, May 22, 2009, which corresponds to 8:00 PM Beijing/Hong Kong time the same day.
The dial-in details for the live conference call are as follows: -- U.S. Toll Free Number: +1-800-510-0219 -- International dial-in number: +1-617-614-3451 -- Passcode: 63021236
A live and archived webcast of the conference call will be available on the Investors section of Yingli Green Energy's website at
? Yinglisolar. A replay will be available shortly after the call on Yingli Green Energy's website for 90 days.
A replay of the conference call will be available until June 5, 2009 by dialing:
-- U.S. Toll Free Number: +1-888-286-8010 -- International dial-in number: +1-617-801-6888 -- Passcode: 95235763
About Yingli Green Energy
Yingli Green Energy Holding Company Limited (NYSE: YGE) is one of the world's leading vertically integrated PV product manufacturers. Yingli Green Energy designs, manufactures and sells PV modules and designs, assembles, sells and installs PV systems that are connected to an electricity transmission grid or operate on a stand-alone basis. Based in Baoding, China, Yingli Green Energy sells its PV modules to system integrators and distributors located in various markets around the world, including Germany, Spain, Italy, South Korea, Belgium, France, China and the United States. For more information, please visit
? Yinglisolar .
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of 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. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Yingli Green Energy's control, which may cause Yingli Green Energy's actual results, performance or achievements to differ materially from those in the forward- looking statements. Further information regarding these and other risks, uncertainties or factors is included in Yingli Green Energy's filings with the U.S. Securities and Exchange Commission. Yingli Green Energy does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
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Yingli Green Energy Reports First Quarter 2009 Results
- Q1 2009 Gross Margin Increased by 2.1% over Q4 2008 to 15.3%
BAODING, China, May 22 /PRNewswire-Asia-FirstCall/ -- Yingli Green Energy Holding Company Limited (NYSE: YGE) ("Yingli Green Energy" or the "Company"), one of the world's leading vertically integrated photovoltaic ("PV") product manufacturers, today announced its unaudited consolidated financial results for the first quarter ended March 31, 2009.
First Quarter 2009 Consolidated Financial and Operating Highlights -- Total net revenues were RMB 999.9 million (US$146.3 million). -- Gross profit was RMB 152.5 million (US$22.3 million) and gross margin was 15.3%. -- Operating income was RMB 20.4 million (US$3.0 million) and operating margin was 2.0%. -- Net loss(1) was RMB 141.6 million (US$20.7 million) and diluted loss per ordinary share and per American depositary share ("ADS") was RMB 1.11(US$0.16). -- On an adjusted non-GAAP(2) basis, net loss(1) was RMB 77.1 million (US$11.3 million) and diluted loss per ordinary share and per ADS was RMB 0.61 (US$0.09).
"Due to weakened macroeconomic conditions globally, including tighter credit for PV system project financing, worse than normal winter weather conditions in Germany and changes in the feed-in tariff policy in Spain, we experienced a tough quarter," said Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. "However, our continued research and development efforts and ability to renegotiate polysilicon supply contracts allowed us to expand our gross margin by 2.1% quarter-over-quarter."
"We are pleased that PV-industry veteran Dr. Dengyuan Song joined Yingli in February as our new chief technology officer. With Dr. Song at the helm, we have seen continued enhancement of our research and development capability and operating efficiency. In addition, we recently signed a strategic cooperation agreement with a prestigious energy research center based in Europe, which we believe will help us enhance our cell efficiency rate and research and development capability. We expect that as our cell efficiency continues to improve through this project, our gross margin will expand further in the medium term."
"We currently have access to up to RMB 6.4 billion in credit from domestic and international banks and have successfully secured additional lines of credit. We believe our healthy capital position demonstrates lenders' confidence in our value proposition and growth potential and allows us to focus on our execution plans."
"We believe that the first quarter marked a low point for the entire solar industry this year, Yingli Green Energy included. However, recent gradual recovery in major markets, especially in Germany, combined with encouraging government policies towards alternative energy in the United States and China, gives us reasons to remain confident in the future of the global solar market," continued Mr. Miao. "We have strategies in place in both developed and emerging solar markets that we expect to help us leverage our cost- competitive business model to expand market share. In Germany and other European countries, we are utilizing our existing strong sales capacity to broaden our sales channels and further diversify our customer mix. In the United States, to take advantage of increasing government support for alternative energy, we have entered into cooperation with key U.S. solar players, including an exclusive supplier framework agreement with AES Solar Energy Ltd., an affiliate of AES Corporation, for its solar projects in major PV markets. Also during the first quarter, we established our U.S. subsidiary, which will be led by Robert Petrina, our U.S. Managing Director and an eight- year solar industry veteran. Under Mr. Petrina's direction we are taking steps towards opening sales centers on the East and West coasts of the United States. In China, exciting developments are taking place in the solar market following the government's recently announced solar subsidy program. We first entered the Chinese domestic PV system installation market in 2002, and we believe our global experience combined with our existing capabilities and on-the-ground network in China, as well as our strong government relationships give us a unique opportunity to gain market share in the rapidly growing Chinese solar market."
"To compliment these strategies, we recently became a member of PV CYCLE, a Brussels-based organization that promotes voluntary take-back and recycling of end-of-life PV modules. We are very proud that Yingli Green Energy is the first China-based company to join PV CYCLE; I believe that this membership speaks to our commitment to reducing the environmental impact of PV production and the development of a sustainable solar industry," Mr. Miao continued.
"We are an industry leader in non-silicon production costs. As declining spot prices for polysilicon continue to cause an industry-wide decline in cost of polysilicon as a percentage of total costs of PV products, we aim to leverage our competitive cost structure to further drive gross margins and gain additional market share. Combined with our vertically integrated business model and low cost, high quality offerings, this gives us great confidence that Yingli Green Energy will continue to be a leader in the rapidly growing global solar market," Mr. Miao concluded.
First Quarter 2009 Financial Results
Total Net Revenues
Total net revenues were RMB 999.9 million (US$146.3 million) in the first quarter of 2009, a decrease of 43.2% from RMB 1,761.2 million in the fourth quarter of 2008 and a decrease of 37.3% from RMB 1,595.0 million in the first quarter of 2008. The decrease from the fourth quarter of 2008 was primarily due to substantial lower shipment volume and lower average selling price, which were impacted by weaker demand resulting from difficult macroeconomic conditions globally, including tighter credit for PV system project financing, worse than normal winter weather conditions in Germany and changes in the feed-in tariff policy in Spain. Furthermore, as close to half of the Company's PV module shipments were under contracts denominated in Euros, average selling price was also negatively impacted by the depreciation of the Euro against the Renminbi in the first quarter of 2009.
Gross Profit and Gross Margin
Gross profit in the first quarter of 2009 was RMB 152.5 million (US$22.3 million), a decrease of 34.5% from RMB 232.9 million in the fourth quarter of 2008 and a decrease of 61.1% from RMB 392.3 million in the first quarter of 2008. Gross margin was 15.3% in the first quarter of 2009, up from 13.2% in the fourth quarter of 2008 and down from 24.6% in the first quarter of 2008. The increase in gross margin from the fourth quarter of 2008 was primarily due to the decrease in unit cost of blended polysilicon in the first quarter of 2009 caused primarily by lower prices of polysilicon purchased in the spot market and under our long term polysilicon supply contracts, as well as lower polysilicon usage per watt achieved through the Company's continued research and development efforts, which was partially offset by the decline in average selling price resulting from weakened macroeconomic conditions and the depreciation of the Euro against the Renminbi.
Operating Expenses
Operating expenses in the first quarter of 2009 were RMB 132.1 million (US$19.3 million), compared to RMB 135.1 million in the fourth quarter of 2008 and RMB 109.6 million in the first quarter of 2008. The decrease in operating expenses compared to the fourth quarter of 2008 was primarily attributable to the better control of sales and marketing related expenses, partially offset by higher research and development expenses. Operating expenses as a percentage of total net revenues increased to 13.2% in the first quarter of 2009 from 7.7% in the fourth quarter of 2008 and 6.9% in the first quarter of 2008, mainly due to the decrease in total net revenues.
Operating Income and Margin
Operating income in the first quarter of 2009 was RMB 20.4 million (US$3.0million), a decrease of 79.2% from RMB 97.8 million in the fourth quarter of 2008 and a decrease of 92.8% from RMB 282.7 million in the first quarter of 2008. Operating margin decreased to 2.0% in the first quarter of 2009 from 5.6% in the fourth quarter of 2008 and 17.7% in the first quarter of 2008.
Interest Expense
Interest expense was RMB 79.0 million (US$11.6 million) in the first quarter of 2009, compared to RMB 51.7 million(3) in the fourth quarter of 2008 and RMB 37.7 million(3) in the first quarter of 2008. The increase in interest expense was consistent with both the increase in long-term bank borrowings from RMB 663.0 million as of December 31, 2008 to RMB 1,172.4 million (US$171.6 million) as of March 31, 2009 and the increase in short-term borrowings from RMB 2,044.2 million as of December 31, 2008 to RMB 2,601.9 million (US$380.8 million) as of March 31, 2009. The weighted average interest rate for these borrowings in the first quarter of 2009 was 7.97%, which increased from 7.68% in the fourth quarter of 2008.
Foreign Currency Exchange Loss (Gain)
Foreign currency exchange loss was RMB93.6 million (US$13.7 million) in the first quarter of 2009, compared to a foreign currency exchange gain of RMB 68.7 million in the fourth quarter of 2008 and a foreign currency exchange gain of RMB 66.3 million in the first quarter of 2008. The Euro depreciated approximately 6.5% against the Renminbi in the first quarter of 2009, compared to an approximately 3.4% depreciation of Euro against the Renminbi in the fourth quarter of 2008, which resulted in a loss upon the revaluation of accounts receivables and raw material prepayments denominated in Euro at the end of the quarter. The foreign currency exchange gain in the fourth quarter of 2008 despite of the Euro depreciation was primarily due to a substantial gain resulting from foreign currency forward contracts that was realized in the fourth quarter 2008
Income Tax Benefit
Income tax benefit was RMB 13.0 million (US$1.9 million) in the first quarter of 2009, compared to RMB 3.1 million(4) in the fourth quarter of 2008 and RMB 0.7 million in the first quarter of 2008. The income tax benefit in the first quarter of 2009 was primarily the result of a deferred tax benefit recognized in connection with the net operating losses incurred in the quarter, while the income tax benefit in the fourth quarter of 2008 was primarily due to an increase of deferred tax assets related to accrued warranty. Under the Enterprise Income Tax Law and the various implementation rules, Tianwei Yingli was subject to an enterprise income tax rate of 0% in 2008 and 12.5% for 2009.
Net Income (Loss)
As a result of the factors discussed above, net loss(1) was RMB 141.6 million (US$20.7 million) in the first quarter of 2009, compared to net income(1) of RMB 82.0 million in the fourth quarter of 2008 and net income(1) of RMB 220.2 million in the first quarter of 2008. Diluted loss per ordinary share and per ADS was RMB 1.11 (US$0.16) in the first quarter of 2009, compared to diluted earnings per ordinary share and per ADS of RMB 0.64 in the fourth quarter of 2008.
On an adjusted non-GAAP basis, which excludes share-based compensation, accretion of the non-cash interest expense resulting from the derivative liability bifurcated from our convertible notes issued in January 2009 and from the equity component bifurcated from our convertible notes issued in December 2007 upon the adoption of FSP APB14-1, respectively, and the subsequent change in the fair value of the derivative liability and amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Tianwei Yingli, an operating subsidiary of the Company, adjusted non-GAAP net loss(1) was RMB 77.1 million (US$11.3 million) in the first quarter of 2009, compared to adjusted non-GAAP net income(1) of RMB 111.4 million in the fourth quarter of 2008. Adjusted non-GAAP diluted loss per ordinary share and per ADS was RMB 0.61 (US$0.09) in the first quarter of 2009, compared to adjusted non-GAAP diluted earnings per ordinary share and per ADS of RMB 0.86 in the fourth quarter of 2008.
Balance Sheet Analysis
As of March 31, 2009, Yingli Green Energy had RMB 1,059.7 million (US$155.1 million) in cash and RMB 2,780.4 million (US$406.9 million) in working capital, compared to RMB 1,108.9 million in cash and RMB 3,231.7 million in working capital as of December 31, 2008. Prepayment to suppliers decreased from RMB 774.0 million as of December 31, 2008 to RMB 453.1 million (US$66.3 million) as of March 31, 2009 as a result of utilization of prepayments in the previous quarter and favorable changes to the payment schedules for polysilicon procurement. Long-term bank borrowings increased to RMB 1,172.4 million (US$171.6 million) as of March 31, 2009 from RMB 663.0 million as of December 31, 2008 and short-term borrowings increased to RMB 2,601.9 million (US$380.8 million) as of March 31, 2009 from RMB 2,044.2 million as of December 31, 2008. As of the date of this press release, the Company had approximately RMB 6,405 million in authorized lines of credit, of which RMB 4,683 million had been utilized.
Note Regarding Senior Secured Convertible Notes due 2012 Issued to Trustbridge
Yingli Green Energy entered into a note purchase agreement with Trustbridge, an affiliate of Gold Sight International Limited ("Gold Sight"), the former minority shareholder of Cyber Power, for up to US$50.0 million in Notes, US$20.0 million of which has been issued, to fund the acquisition of Cyber Power Group Limited ("Cyber Power"). In January 2009, the Company issued the first tranche of the Notes in the principal amount of US$20.0 million, In the first quarter of 2009, the Company recorded an interest expense and a derivative liability loss relating to the first tranche of the Notes in the principal amount of US$20.0 million. The interest expense is amortized over the term of the Notes. Such interest expense and derivative liability are non-cash charges and will not impact our cash flow. If the conversion price of the Notes remains substantially below the market price at the time of the issuance of the remaining Notes, the Company will be required to account for the difference as an interest expense, which would have a material adverse effect on our results for the relevant period. In addition, the Company will be required to account for any derivative liability gain or loss relating to the outstanding Notes, which would also have a material effect on our results for the relevant period.
First Quarter 2009 and Recent Business Highlights Sales -- Yingli Green Energy entered into a sales contract with GOLDBECK Solar GmbH, under which Yingli Green Energy is expected to supply a minimum of 15 MW and potentially up to 58 MW of PV modules to GOLDBECK Solar in 2009. -- Yingli Green Energy entered into a three-year exclusive supplier framework agreement with AES Solar Energy Ltd, a leading global developer, owner and operator of utility-scale solar plants, for its solar projects in major PV markets. Financing -- Three of Yingli Green Energy's PRC subsidiaries received new short-term loans totaling RMB 420 million from domestic banks and Baoding Yingli Group Company Limited ("Yingli Group"), an affiliate of the Company. -- Yingli Group entered into a strategic cooperation agreement with the Hebei Branch of Bank of China, under which the Bank of China expects to grant, subject to internal procedures to be conducted in accordance with the bank's risk management and operational regulations, credit facilities in a maximum amount of RMB 6 billion to entities affiliated with Yingli Group, including three PRC subsidiaries of Yingli Green Energy. -- Yingli Green Energy drew down the US$50 million under the three-year loan facility provided by a fund managed by Asia Debt Management Hong Kong Limited ("ADM Capital"). -- Yingli Green Energy renewed and enlarged credit lines in an aggregate amount of RMB 1.1 billion with the Export-Import Bank of China, a government policy bank of China's central government. Others -- The Chief Financial Officer Mr. Zongwei Li was appointed to the Company's board of directors and Professor Ming Huang to the board's audit committee; and Mr. George Jian Chuang resigned from the Company's board. -- Yingli Green Energy became the first China-based company to join PV CYCLE, a Brussels-based organization that promotes voluntary take-back and recycling of end-of-life PV modules.
Business Outlook for Full Year 2009
Based on current market and operating conditions, estimated production capacity and forecasted customer demand, as well as current exchange rates for the U.S. dollar, Euro and Renminbi, the Company is updating its PV module shipment target to be in the estimated range of 450 MW to 500 MW for fiscal year 2009, which represents an increase of 59.9 % to 77.6 % compared to fiscal year 2008, subject to, among other factors, the successful installation and ramp-up of the Company's additional 200 MW planned expansion in the third quarter of 2009.
In addition, after taking into consideration the negative impact of expected decreases in the average selling price of PV modules and further depreciation of the Euro against the U.S. dollar, the Company currently expects that its gross margin target for fiscal year 2009 to be in the estimated range of 23 % to 25 %.
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with generally accepted accounting principals in the United States, or GAAP, this press release includes certain non-GAAP financial measures of adjusted net income (loss)(1) and adjusted diluted earnings (loss) per ordinary share and per ADS, each of which is adjusted to exclude items related to share-based compensation, accretion of the non-cash interest expense resulting from the derivative liability bifurcated from our convertible notes issued in January 2009 and from the equity component bifurcated from our convertible notes issued in December 2007 upon the adoption of FSP APB14-1, respectively, and the subsequent change in the fair value of the derivative liability and amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Tianwei Yingli, an operating subsidiary of the Company. The Company believes excluding these items from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such items are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP. For a reconciliation of each of these non- GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial information included elsewhere in this press release.
Currency Convenience Translation
Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB 6.8329 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of March 31, 2009. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollar amounts at such rate, or at any other rate. The percentages stated in this earnings release are calculated based on Renminbi.
Conference Call
Yingli Green Energy will host a conference call and live webcast to discuss the results at 8:00 AM Eastern Daylight Time (EDT) on Friday, May 22, 2009, which corresponds to 8:00 PM Beijing/Hong Kong time the same day.
The dial-in details for the live conference call are as follows: -- U.S. Toll Free Number: +1-800-510-0219 -- International dial-in number: +1-617-614-3451 -- Passcode: 63021236
A live and archived webcast of the conference call will be available on the Investors section of Yingli Green Energy's website at
? Yinglisolar. A replay will be available shortly after the call on Yingli Green Energy's website for 90 days.
A replay of the conference call will be available until June 5, 2009 by dialing:
-- U.S. Toll Free Number: +1-888-286-8010 -- International dial-in number: +1-617-801-6888 -- Passcode: 95235763
About Yingli Green Energy
Yingli Green Energy Holding Company Limited (NYSE: YGE) is one of the world's leading vertically integrated PV product manufacturers. Yingli Green Energy designs, manufactures and sells PV modules and designs, assembles, sells and installs PV systems that are connected to an electricity transmission grid or operate on a stand-alone basis. Based in Baoding, China, Yingli Green Energy sells its PV modules to system integrators and distributors located in various markets around the world, including Germany, Spain, Italy, South Korea, Belgium, France, China and the United States. For more information, please visit
? Yinglisolar .
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