Yingli Green Energy Hold. Co. Ltd. (ADR) (YGE), Canadian Solar Inc. (CSIQ): Europe and China Settle Solar Dispute — Who Won?

Earlier this month I calculated that Trina needs to generate a 9.9 cent gross margin on each panel and Canadian Solar Inc. (NASDAQ:CSIQ) needs an 8.9 cent gross margin just to break even. They may be able to get close to those margins if they can cut costs as the year goes on. Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE), however, needs a 17.3 cent gross margin to break even because of its high debt load, which is still too much to overcome.

Foolish bottom line
There are pluses and minuses to the negotiated solar deal for Chinese suppliers. Volume to Europe will likely go down but margins will go up — if China, Japan, and the U.S. can fill the volume gap, then it may become a net positive. We’ll learn more when companies give third-quarter projections, so stay tuned for the financial ramifications. For now, the highest-quality, highest-efficiency manufacturers will likely become winners by taking share from their lower-quality neighbors.

The article Europe and China Settle Solar Dispute — Who Won? originally appeared on Fool.com is written by Travis Hoium.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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