‘Silicon Module Super League’ (SMSL) member Canadian Solar continues to push its PV power plant business development to fill a growing demand issue as revenue for the second quarter of 2018 missed company expectations.
The SMSL had previously expected PV module shipments to be in the range of approximately 1.50GW to 1.60GW for the second quarter of 2018, which included approximately 100MW of shipments to its utility-scale, solar power projects.
However, the company reported module shipments of 1,700MW and 246MW shipped to its own solar projects that have not been recognized into revenue in the quarter.
Net revenue in the second quarter was US$650.6 million, down 54.3% when compared to US$1.42 billion in the first quarter of 2018. The company had previously guided revenue to be in the range of US$690 million to US$730 million.
Net revenue from the total solutions business as a percentage of total net revenue was reported at 20.1% compared to 64.2% in the first quarter of 2018. The company had sold a number of PV power plants, primarily in the US in the first quarter of 2018, accounting for a revenue gain of US$879.9 million, compared to US$85.6 million in the second quarter of 2018.
Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, commented, “Our second quarter revenue was affected by the deferral of several project sales as well as an industrywide lower average module selling price. The solar policy change in China effective on May 31, 2018 has caused a significant disruption in China, and the global solar industry. We also incurred a relatively large foreign exchange loss due to the depreciation of currencies in certain developing countries against US dollar during the quarter.”
Canadian Solar reported a gross margin of 24.5% in the second quarter, which included the benefits of two US AD/CVD reversals of US$13.1 million and US$12.6 million, based on the final rates of Solar 2 AD AR2 and Solar 1 CVD AR4, respectively.
However, excluding these AD/CVD reversal benefits, gross margin was 20.5%, compared to 10.1% in the first quarter of 2018, and second quarter 2018 guidance of a range of 20.0% to 22.0%.
Dr. Huifeng Chang, Senior Vice President and Chief Financial Officer of Canadian Solar, noted, “We were able to improve our gross margin excluding the AD/CVD reversal benefits to 20.5% as we balanced higher than expected shipments of solar modules with our continued focus on cost controls.”
Gross profit in the second quarter of 2018 was US$159.4 million, compared US$143.9 million in the first quarter of 2018.
The SMSL said that it expected total solar module shipments to be in the range of 1.5GW to 1.6GW in the third quarter, including approximately 210MW of shipments to its utility-scale, solar power projects.
Total revenue for the third quarter is expected to be in the range of US$790 million to US$840 million. Gross margin for the quarter is expected to be between 20.0% and 23.0%.
“The revision of our annual guidance is in-line with the boarder industry and mainly reflects the expected reduction of shipment volumes to the Chinese market in the second half of the year, as well as the expected lower solar module average selling price,”added Qu.
The SMSL noted that it had lowered full-year PV module shipments to 6GW to 6.2GW, compared to previous guidance of 6.6GW to 7.1GW.
Full-year revenue was lowered to US$4.0billion to US$4.2 billion, down from US$4.4 billion to US$4.6 billion, previously guided.