Trina Solar Limited today announced its unaudited financial results for the first quarter of 2014 including: Solar module shipments were 558.0 MW during the first quarter of 2014, compared to 770.1 MW in the fourth quarter of 2013; Net revenues were $444.8 million, a decrease of 15.4% from the fourth quarter of 2013; Cost of revenues was $353.3 million, a decrease of 20.9% from the fourth quarter of 2013; Gross profit was $91.5 million, an increase of 15.7% from the fourth quarter of 2013; Gross margin was 20.6%, compared to 15.1% in the fourth quarter of 2013; Operating income was $38.2 million, an increase of 93.1% from the fourth quarter of 2013; Operating margin was 8.6%, compared to 3.8% in the fourth quarter of 2013; Net income was $26.5 million, an increase of 73.5% from the fourth quarter of 2013; and Earnings per fully diluted American Depositary Share ("ADS" and each ADS represents 50 of the Company's ordinary shares) was $0.37, compared to $0.21 in the fourth quarter of 2013
Mr. Jifan Gao, Chairman and Chief Executive Officer of Trina Solar commented, "I am pleased to report that we delivered another set of solid results despite some headwinds in the first quarter. We remain focused on maintaining profitable growth as opposed to pursuing volume growth alone. By employing this strategy, we increased our gross margin to 20.6% this quarter, a significant improvement from the previous quarter's 15.1%. This improvement underpinned a net income increase of 73.5% quarter-over-quarter. Trina continues to see the positive impact of our focus on efficient operations, controlled business expansion and disciplined financial management.
"We have made further progress adjusting our sales mix to achieve relatively stable ASP in spite of the general downward trend in prices. This is critical to our sustainable growth and long-term profitability. In this quarter, our shipments to high ASP regions, such as Japan, grew significantly, accounting for 30% of our total external shipments. We have also further penetrated into new and emerging markets by leveraging our strong on-the-ground sales networks and our industry-leading technology to deliver high quality solar solutions tailored for each region.
"We are conscious of the importance of balancing the pace of our growth with our commitment to developing superior products if we are to maintain long-term success. Given the highly competitive nature of the global market, it is essential for us to focus on what are the critical drivers for future growth. Innovation, product development and the pursuit of superior quality remain the cornerstones of our business. In the first quarter we made excellent progress in improving module power output and the quality of our self-produced PV cells and modules. Investing in product innovation will remain key throughout 2014 as we strive to maintain our position at the forefront of technological innovation in the global solar industry.
"We are also progressing well in our downstream business. In the first quarter, we successfully completed the sale of our 50 MW power plant in Wuwei, Gansu province. Further, we have started construction of several projects in China. We believe that we are well on track to achieve our target of developing 400 MW to 500 MW of downstream PV projects in 2014. Looking ahead, we are optimistic about global demand for our products and are confident that we will be able to realize our 2014 module shipment target of 3.6 GW to 3.8 GW. We believe the synergies between module sales and our solar project development business will generate both capital gains and ongoing revenues from stable power generation."
Net revenues in the first quarter of 2014 were $444.8 million, a decrease of 15.4% sequentially and an increase of 70.9% year-over-year. Total shipments were 558.0 MW, of which 23.8 MW were shipped to the Company's own downstream power plants in the UK, compared to total shipments of 770.1 MW in the fourth quarter of 2013 and 392.6 MW in the first quarter of 2013. Revenues were not recognized for 23.8 MW of internal shipments as required by U.S. GAAP regulations. The sequential decrease in revenues and shipments was primarily due to a seasonal slowdown in demand in China and the previously noted decreased shipments to the EU as a result of uncertainty in the minimum pricing agreement between the PRC and the EU. The year-over-year increase in shipments and revenues was driven largely by rising shipment volumes due to growing demand from key geographical regions, particularly China, Japan and the U.S.
Gross profit in the first quarter of 2014 was $91.5 million, as compared to $79.1 million in the fourth quarter of 2013 and $4.4 million in the first quarter of 2013. Gross margin was 20.6% in the first quarter of 2014, compared to 15.1% in the fourth quarter of 2013 and 1.7% in the first quarter of 2013. The sequential increase was primarily due to an increase in ASP attributable to greater sales to relatively higher priced markets, particularly Japan, as well as continued efforts in cost control. The year-over-year increase in gross margin was primarily due to the increase in ASP and decrease in costs on a per watt basis. The sale of the 50 MW downstream project in Wuwei also contributed to the sequential and year-over-year increase in gross margin.
Operating expenses in the first quarter of 2014 were $53.3 million, a decrease of 10.2% sequentially and an increase of 19.7% year-over-year. The sequential decrease was primarily due to a decrease in selling expenses, particularly lower shipping and warranty expenses, as a result of lower shipment volumes as well as decreased R&D expenses. The Company's operating expenses represented 12.0% of first quarter net revenues, an increase from 11.3% sequentially and a decrease from 17.1% during the first quarter of 2013. Operating expenses included an accounts receivable provision of $1.2 million in the first quarter of 2014, compared to a reversal of accounts receivable provisions of $9.5 million in the fourth quarter of 2013 and a reversal of account receivable provisions of $11.1 million in the first quarter of 2013.
