Canadian Solar cites market share gains as shipments grew 65% in 2011

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Updated: As previously guided, Canadian Solar increased sales and shipments in the difficult fourth quarter of 2011, enabling the module manufacturer to post full-year revenue of US$1.9 billion, compared to net revenue of US$1.5 billion for fiscal year 2010. Fourth quarter shipments were 436MW, an increase of 23% from 355MW in the third quarter 2011. However, declining margins due to falling module ASPs resulted in an annual loss of US$43.9 million. The company expects to ship approximately 1,800MW to 2,000MW of solar products in 2012, supporting market share gains achieved in 2011.

Dr. Shawn Qu, chairman and chief executive officer of Canadian Solar, remarked: “Canadian Solar continued to execute and thrive in a highly challenging global market and benefit from customers flight to quality,. As for specific markets, we had positive growth in the US, Europe, China and India in 2011. China has been our fastest growing market given the lower base it started at, with forecasts calling for a potential 3GW to 5GW opportunity in 2012.  Importantly, we made substantial progress in our strategy of building our downstream total solutions business and currently have more opportunities than we could possibly address, which is allowing us to be selective.”

Canadian Solar reported a net loss in the fourth quarter of US$59.9 million and a net loss for the year of US$43.9 million.

Inventory at the end of the fourth quarter was US$296.6 million, compared to US$406 million at the end of the third quarter of 2011. Inventory turnover days were 80 days in the fourth quarter, compared to 85 days in the third quarter of 2011.

By geography, in the fourth quarter of 2011, sales to European markets represented 46.5% of revenue, sales to North America represented 26.9% of revenue and sales to Asia and all other markets represented 26.6% of revenue, compared to 61.7%, 16.1% and 22.2%, respectively, in the third quarter of 2011 and 70.9%, 10.3% and 18.8%, respectively, in the fourth quarter of 2010.  Specifically, India, China and the US were said to be markets of notable positive growth in 2011.

Guidance

Canadian Solar guided shipments in the first quarter of 2012 to be in the range of approximately 340MW to 350MW, with gross margins expected to be between 5% and 8%.  Shipments for 2012 were guided to in the range of 1,800MW to 2,000MW.

The company also expects to ship between 300MW-400MW of ELPS-technology based modules in 2012. Production capacity is being managed at the 2GW level this year.

The cost-per-watt was said to have reached US$0.75/W at the end of 2011 and is expected to decline to US$0.65/W by the end of 2012. Cost reductions were expected to be across the board, but reduction in silver paste usage was a key contributor outside polysilicon price declines.

Management also noted in a conference call to discuss results that falling module prices brought grid parity closer in many emerging markets, which would support further shipment increases in 2012. Management also noted that it had experienced a strong shift to customers using tier 1 suppliers.

Update

Module manufacturing capacity reached 2.05GW at the end of 2011. Management also noted that it had been ramping ‘quasi-mono’ wafer production in increasingly larger volumes since the third quarter and would offer its ELPS cell technology using the hybrid wafer for additional efficiency and characteristic benefits. 
 
However, previous plans to increase in-house cell production to better match internal wafer production remained on hold due to market conditions, though further upside in demand could spark expansion, though this wasn’t likely until the second-half of the year. Capital expenditure plans of approximately US$200 million were touted for 2012 but would therefore be market demand driven.

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