Canadian Solar expects strong demand growth in 2017 on record 2016 module shipments

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Canadian Solar reported fourth quarter 2016 revenue of US$668.4 million, up 1.7%, compared to US$657.3 million in the third quarter of 2016. Image: Canadian Solar

Silicon Module Super League (SMSL) member Canadian Solar exceeded fourth quarter 2016 shipment and full-year guidance, due to strong demand at the end of the year but profitability was impacted by lower ASP’s and revised US anti-dumping and countervailing duties. 

Canadian Solar reported fourth quarter 2016 revenue of US$668.4 million, up 1.7%, compared to US$657.3 million in the third quarter of 2016. Gross margin was 7.3% including an anti-dumping and countervailing duties (AD/CVD) true-up provision of US$44.1 million associated with the prior years' module sales. 

Without the US AD/CVD impact, Canadian Solar said that the gross margin would have been 13.9%, compared to 17.8% in the third quarter of 2016, and fourth quarter guidance in the range of 11.0% to 16.0%. 

The company reported a fourth quarter net loss of US$13.3 million. Gross profit in the fourth quarter of 2016 was $49.0 million, compared $117.3 million in the third quarter of 2016

Canadian Solar reported fourth quarter 2016, solar module shipments of 1,612MW, of which 1,581MW were recognized in revenue, compared to 1,161MW recognized in revenue in the third quarter of 2016. Solar module shipments recognized in revenue in the fourth quarter of 2016 included 85.6MW used in downstream total solutions business, compared to 16.3MW in the third quarter of 2016. Total module shipments were higher than previously guided of 1.4GW to 1.5GW.

On a geographical basis, module sales in Asia increased significantly in the fourth quarter, accounting for over 62% of revenue, while North America declined from 41% of sales in the third quarter of 2016 to only 20% in the fourth quarter. Europe and other regions remained flat on a percentage basis at around 16% of sales.

Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, remarked: “Results for the fourth quarter and full year 2016 were inline with our expectations, other than the unfavorable preliminary ruling on AD/CVD rates by U.S. Department of Commerce. We achieved record high total solar module shipments in the fourth quarter and the full year 2016. Despite strong demand levels, our revenue for both the fourth quarter and full year was lower compared to the prior year's periods due to the industry-wide declines in average selling price that have been persistent all year.  

2016 full-year results

Canadian Solar reported full-year module shipments of 5,232MW in 2016, a new record for the company, compared to 4,706MW in 2015. The company also beat lowered shipment guidance of 5,073MW to 5,173MW, yet was still lower than initial guidance for the year of 5.4GW to 5.5GW. 

Net revenue in 2016 was US$2.85 billion, compared to US$3.47 billion in 2015, and full year 2016 guidance in the range of $2.78 billion to $2.94 billion. 

Net revenue from the total solutions business was 6.9% of total net revenue, compared to 30.9% in 2015. Net income attributable to Canadian Solar was US$65.2 million, compared to US$171.9 million in the previous year. 

Guidance

Canadian Solar said it expected solar module shipments to be in the range of approximately 1.15GW to 1.2GW, including approximately 120MW of shipments to its utility-scale solar power projects in the first quarter. Total revenue for the first quarter of 2017 is expected to be in the range of US$570 million to US$590 million. Gross margin for the first quarter is expected to be between 13% and 15%.

Canadian Solar expects total module shipments to be in the range of approximately 6.5GW to 7.0GW, with approximately 6.17GW recognized in revenue. This would equate to a shipments growth rate between 25% to 34%, compared to around 11.2% shipment growth reached in 2016.

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