Management had suggested that revenues would be between $195 million and $205 million in the first quarter of 2010. In the end, revenue came in at $206.6 million, up from $179.9 million in the previous quarter and nearly double revenues from the previous year. The outperformance was mainly due to higher than expected wafer shipments – 242.4MW against guidance of up to 230MW.
The pre-tax profit of $15.4 million was a big improvement on the 2009 fourth quarter loss of $22.5 million and the loss of $62.8 million in the first quarter of 2009.
A sharp fall in the cost of polysilicon to $60/kilo, from $74/kilo in the fourth quarter of 2009, and other cost reductions helped ReneSola to achieve a positive gross margin.
Selling prices are beginning to rise as demand strengthens. Broker Panmure Gordon believes that selling prices are unlikely to fall until the fourth quarter at the earliest as management says that the business is nearly booked up for the rest of the year.
Panmure Gordon has increased its 2010 revenue forecast by 9% to $883.7 million and doubled its pre-amortisation profit to $87.9 million. Earnings per share of 36.1 cents are forecast by Panmure Gordon, but this could prove conservative. ReneSola believes earnings could beat 50 cents.
Market: AIM
Symbol: SOLA
Price: 202p
12 month high/low: 256.25p/112p
Market cap: £349m
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