Canadian Solar reports annual loss of US$195 million; shipments to increase in 2013

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Falling solar module prices continued to impact Canadian Solar’s financial results as the company more than doubled losses year on year.

The company reported a full-year loss from operations of US$142.5 million and a net loss of US$195.1 million for 2012. It reported full-year net revenue of US$1.3 billion, compared to US$1.9 billion in fiscal year 2011, due primarily to continued ASP declines.

Solar module shipments in 2012 were 1,543MW, up 16.6% from 1,323MW in fiscal year 2011.

Fourth quarter results

Canadian Solar reported net revenue for the fourth quarter of 2012 of U$294.8 million, down 9.5% from $326 million in the third quarter of 2012 and down 37.8% from US$474.1 million in the fourth quarter of 2011. 

Total solar module shipments in the fourth quarter were 404MW, compared to 384MW in the prior quarter and 436MW in the same quarter a year ago.

On a geographic basis, Canadian Solar said that sales into Europe accounted for 40.6% of net revenue, North America 20.0% and sales to Asia and all other markets represented 39.4% of net revenue in the fourth quarter. 

PV project pipeline update

Management noted in a conference call to discuss financial results that the company had a PV project pipeline of 780MW and expects at least 50% of 2013 total revenue would be accounted for by its systems solution business, which primarily handles its PV project business.

On a regional basis the company has 400MW of projects in Canada, 250MW in the US and 100MW in other regions combined. There were 29 projects planned under the Canadian pipeline.

Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar noted in the call that all of the projects in Canada had buyers lined up, which would translate into revenue of around US$1.5 billion.

However, the project pipeline in Canada spans 2013 through 2014 with two expected to be completed and revenue recognised in 2015.

Management also noted that it expected the Japanese market to continue to grow, notably from its module system kits and also the start of utility-scale projects in Japan for the first time.

Overall, the company is preparing to undertake larger sized projects in the future as it has gained valuable experience over the last few years. Based on that experience the company will also plan projects in more emerging companies in the future.

In the US market, Canadian Solar said that it expected to complete construction of solar power plants totalling 100MW (DC) in the US in 2013.

Management noted that it would build projects in China, yet would remain very cautious with its project selection in the Chinese domestic market.

Indeed the business focus for module sales as well as projects was to concentrate on low-risk countries such as the US, Japan and Canada, which also offered higher margins than other regions. Notably, management didn’t include Europe as a low-risk region.

Qu noted in the call that there had been strong hints from the market that the EU would impose retroactive tariffs on Chinese produced modules. He noted that the European market was expected to be “choppy” in 2013.

Total solar module shipments in the fourth quarter included 15.7MW in its total solutions business, compared to 21.1MW in the third quarter of 2012 and 16.3MW in the fourth quarter of 2011.

Production update

Management said there were not any plans to add capacity in 2013, but noted that they were constantly monitoring the situation.

However, the company highlighted that it had met its ambitious “all in” module manufacturing cost reduction targets for the year. Manufacturing cost per watt ended the year at US$0.55/W. The company had guided US$0.55 to US$0.60/W, earlier in 2012.

Noting that polysilicon prices were rising, management only guided that on processing cost reductions the company was aiming for a few cents reduction in 2013, though this was only guided in connection of polysilicon prices remaining stable this year in the regions of US$20/kg.

The company said that its ELPS solar cell technology capacity stood at 120MW at the end of the year, but did not say whether this would be expanded in 2013.

Guidance

Canadian Solar guided first quarter 2013 module shipments to be in the range of approximately 290MW to 310MW, with gross margin expected to be between 8.0% and 10.0%.

For the full year 2013, Canadian Solar expects module shipments to be in the range of approximately 1.6GW to 1.8GW, including modules used in its total solutions business.

Qu said: “Clearly, our strategic decision to focus on the downstream total solution business several years ago has proven to be the right one. This is highlighted by our success at building scale in this business in low risk countries such as Canada, Japan and the U.S. Our total solutions business capability and project pipeline, supported by our low cost manufacturing capability, position us well for the next phase of growth in the solar power industry. Our focus for 2013 is on returning to profitability on a full year basis.”

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