One of the worlds largest solar module and cell manufacturers recorded some impressive financial figures for the second quarter of 2016, making yearly and sequential gains in its revenues, sales and income. The news comes as little surprise, as the Chinese market went into overdrive during the first half of the year, which is where the vast majority of the companys external shipments went during the quarter.
To underline the increase in demand, JA Solar made quarterly shipments of 1,380.8 MW 1,229.3 MW to external customers which is an increase of 55.5% from the same period last year, and an 18.4% increase from the first quarter of 2016. Unsurprisingly, this resulted in significant revenue increases, generating RMB 4.1 billion (US$619 million) in the quarter, which is 51.9% higher than Q2 2015 and 18.6 % higher than Q1 2016.
Importantly, this translated into a rise, albeit a small one, in net income for the quarter, which came in at RMB 164.1 million ($24.7 million), compared to RMB 136 million ($20.5 million) in the same period last year and RMB 158 million ($23.8 million) sequentially. Of course, a huge push for solar deployment in China before the subsidy reduction was the main catalyst for these increases, as the country made up 63.9% of all of JA Solars external shipments during the quarter, compared to 45.3% of shipments in Q2 2015.
Second quarter results were in line with our expectations, with shipments and revenue growing over 50% year-over-year, commented JA Solar Chairman and CEO Boafang Jin. We are also encouraged by our downstream project development achievements as we successfully connected approximately 250 MW of solar projects to the grid in the quarter. As expected, China was our strongest market in the quarter, driven by accelerated activity ahead of subsidy reductions that occurred this summer.
Even with the impressive sales figures, JA Solars operating profit and margin did not see across the board increases. The quarterly operating profit of RMB 188 million ($28.3 million) was an improvement from the RMB 156.1 million ($23.5 million) registered in the same period last year, but was down from the RMB 223.3 million ($33.6 million) generated in the first quarter of 2016. The companys operating margin dropped yearly and sequentially to 4.6%, compared with 5.8% and 6.4% respectively.
Although the demand in China is expected to reduce, the company is expecting decent module and cell shipments of between 1,200 to 1,300 MW in Q3 2016. While the entire year should see somewhere between 5.2 GW to 5.5 GW of shipments made.
While regulatory change should slow down the domestic Chinese market in the second half of the year, we believe our balanced global footprint and flexible business model will allow us to adjust to evolving market conditions, added Jin. Our project business provides flexibility in our business model, since we can accelerate or slow down activity in order to balance demand for our modules.
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