Yingli Green Energy Holding Co. Ltd. (YGE), a China-based manufacturer of photovoltaic products, Wednesday reported a decline in its net income for the third quarter, notwithstanding a 73.1% growth in net revenues. The company also reaffirmed its revenue guidance for fiscal 2008. The company also signed a binding letter of intent to acquire Cyber Power Group Limited.
Net income for the third quarter declined 15.8% to RMB 150.81 million or US$22.21 million from RMB 179.05 million in the prior-year quarter. Earnings per share declined to RMB 1.17, or US$0.17 per American Depository Share, or ADS, from RMB 1.38 in the prior-year quarter. Net income for the quarter included share-based compensation and amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interest in the company's principal operating subsidiary Tianwei Yingli.
Net income, excluding items for the quarter decreased 25.2% to RMB 175.31 million or US$25.82 million from RMB 196.52 million. Earnings per share declined to RMB 1.35, or US$0.20 per ADS, from RMB 1.52 in the same quarter last year.
Net revenues for the quarter surged 73.1% to RMB 2.21 billion, or $325.5 million from RMB 1.28 billion in the prior-year quarter. Revenues for the quarter increased owing to increased shipment volume as a result of continued strong demand for photovoltaic modules supported by increased production output, partially offset by lower average selling price.
Gross margin for the third quarter was 22.3% compared to 23.7% in the same quarter last year. The decrease in gross margin for the quarter was primarily due to the decrease in the average selling price caused by the depreciation of the Euro against the Renminbi.
Total operating expenses for the third quarter increased to RMB 115.51 million, or US$17.0 million from RMB 78.83 million in the prior year quarter.
The company reported a foreign currency exchange loss of RMB 133.1 million or US$19.6 million for the third quarter, reflecting depreciation of Euro against Renmimbi, compared to a gain of RMB 14.0 million in the year-ago quarter.
Looking ahead, the company reiterated its revenue guidance for fiscal 2008 to the range of US$1.05 billion to US$1.11 billion, representing an increase of 89.2% to 98.7% from the earlier guidance ranging from US$969 million to US$1.02 billion.
Further, the company said that it signed a binding letter of intent for proposed acquisition of Cyber Power Group Ltd., a company incorporated under the laws of the British Virgin Islands, for US$70 million to US$80 million.
The company anticipates the proposed acquisition will enable it to have a more secure and stable supply of polysilicon independent of market conditions, and allow it to further vertically integrate its manufacturing processes and improve margins.
YGE is currently trading at US$4.61, upUS$0.12 or 2.67%, on a volume of about 0.56 million shares on the NYSE.
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