Trina Solar (TSL.NASDAQ) achieved profits of US$49.2 million during the fourth quarter of 2009, up from a loss of US$700,000 for the same period a year ago. Gross margins tripled year-on-year, and shipments of solar modules increased 33% over the third quarter. Trina Solar’s total profits for 2009 were US$97.6 million, up nearly 60% on 2008.
Trina benefited from higher margins and increased exports to European markets as demand rose ahead of German solar subsidy cuts. In recent months, the Chinese Ministry of Science and Technology has also chosen Trina to establish a State Key Laboratory for photovoltaic development, and the company’s research department has developed a square monocrystalline cell capable of conversion efficiency of 19%.
As one of the lowest cost solar cell manufacturers, Trina’s recent profits demonstrate a capability for strong growth within China’s solar market. However, Germany’s plan to reduce solar subsidies on July 1 and a predicted decline in demand could punish the entire industry and slash margins overall.
Trina’s current margins trail its competitor First Solar (FSLR.NASDAQ), but cuts in operating expenses and lower input pricing due to a supply agreement extension will allow Trina to reduce costs in the coming quarters. Combined with its technology advances, the company may be in the best position to weather a decline in German demand and further distinguish itself from competitors including Yingli Green Energy (YGE.NYSE) and Suntech Power Holdings (STP.NYSE).