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Yingli Green Energy expects gross margin to rise to as much as 20 per cent this year. Photo: EPA

Solar-panel maker Yingli Green Energy expects gross margin to rise

"Our production costs will decline considerably as new materials and technology are used, economy of scale intensifies and conversion efficiency rises," chief financial officer Bryan Li said in an interview from Baoding, Hebei province, where the company is based.

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Yingli Green Energy, the world's biggest maker by capacity of silicon-based solar panels, expects gross margin to rise to as much as 20 per cent this year if module prices rebound and production costs drop.

"Our production costs will decline considerably as new materials and technology are used, economy of scale intensifies and conversion efficiency rises," chief financial officer Bryan Li said in an interview from Baoding, Hebei province, where the company is based.

"Module prices have been steady for some time and will return to a more rational level."

The comments reflect growing optimism among solar manufacturers on the mainland following a 61 per cent plunge in panel prices in the past two years because of oversupply.

Solar manufacturers have been contending with a global glut that is driving down prices and cutting into margins as governments from Europe to the United States reduce support. Photovoltaic panel prices have begun to recover slightly, rising 6 per cent since the end of last month.

In November, Yingli reported gross margin was negative in the third quarter, for the first time since the firm listed on the New York Stock Exchange in 2007, coming in at minus 23 per cent because of falling prices and lower sales in Germany.

Current gross margin is in "single digits", Li said.

Yingli's target "is very optimistic but possible", said Wang Xiaoting, an analyst at Bloomberg New Energy Finance.

"Module prices are at bottom and very likely to rebound and the average cost will fall as shipments rise."

Yingli would increase shipments by at least 50 per cent this year from last year, when it shipped more than 2.2 gigawatts, Li said.

The domestic market will account for about a third of Yingli's panels this year.

This article appeared in the South China Morning Post print edition as: Solar-panel maker expects gross margin to rise
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