Yingli scales up its output
Yingli Green Energy Holding Company Ltd, one of the world's leading solar panel makers, is planning to increase its production capacity by at least four times to meet strong demand from overseas markets.
"We will continuously enlarge the scale of our production since we received orders for 4 gigawatts (gW) for 2011 by the end of June. The current production capacity is expected to just exceed 1 gW," Bryan Li, chief financial officer of Yingli, told China Daily.
The New York-listed company began construction of a 100-megawatt multi-crystalline silicon solar cell manufacturing plant last month in Hainan province at a cost of 770 million yuan. The new plant is expected to be completed by May 2011.
"Our company will also co-opt some qualified subcontractors to help us meet increasing demand from international markets," said Li, declining to reveal further details.
As an export-oriented private photovoltaic (PV) cell producer, 90 percent of Yingli's products are now exported to the United States and Europe every year. Last year Yingli controlled nearly 10 percent of the solar market of Germany, the country that boasts the world's largest photovoltaic module market.
However, analysts said the PV market in Germany and other European countries may face a major downturn in the second half of this year due to the cutting of government subsidies in the PV industry.
Li said that Yingli would not be affected because the price of polysilicon, the main raw material for the making of photovoltaic solar panel, was also going down.
Meanwhile, Fine Silicon, Yingli Green Energy's affiliated polysilicon manufacturing facility, began operations in August. It has an annual production capacity of 3,000 metric tons .
"For companies like Yingli which possess the whole production chain, profit margin will not be compressed," Li said.
According to Yingli's quarterly financial report released on August 19, its second quarter net income climbed to 217.8 million yuan, compared with the first quarter's 190.9 million. Yingli's gross margin reached an historical high of 33.5 percent in the second quarter.
However, the depreciation of the euro is eating into the profits of export-oriented solar cell makers.
Since the beginning of this year, the euro has dropped about 15 percent against the US dollar. In the second quarter of 2010, Yingli had lost 158.6 million yuan mainly due to euro volatility.
Li said the company was tapping potential markets in India, Australia and the US to reduce its reliance on European clients.
Yingli also plans to raise prices to balance out the currency exchange loss, Li said. The company will increase the price by about 3 to 5 percent, which is expected to bring in around $50 million to $80 million of additional earnings.
"That is more than enough for us to sponsor another FIFA World Cup," said Li. Yingli was the first Chinese enterprise and also the first renewable energy company in the world to sponsor the soccer tournament in South Africa this year.
Thanks to the sponsorship, the market value of Yingli increased 48.6 percent to $612 million by the end of July.