Project business drives Canadian Solar back into profit

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Canadian Solar has announced a return to profitability, with its project business and new markets leading the way.

Net revenue for the third quarter of 2013 was US$490.9 million, up 50.6% from $326.0 million in the same period last year.

The company’s module shipment for the quarter totalled 478MW, beating its forecast of 410-430MW but it was the project business that excelled.

“Our success has been mainly driven by our total solutions business, which accounted for over 41% of the total net revenue in Q3, up from about 26% in Q2,” said Shawn Qu, CEO, chairman and president of Canadian Solar during a call with analysts.

“Our powerful momentum is clearly evidenced by the project sales we announced, new project investors secured, continuous progress on the development of our existing pipeline, including the expansion of our late-stage project pipeline in Japan.

“It is also evidenced by large module contracts the company announced in China and emerging new markets.”

Qu said the company’s modules had been successful in Thailand,  India, China, the US and Japan. Canadian Solar expects to sell more than 500MW to Japan alone this year.

“We were one of the first foreign module suppliers to establish our brand in Japan, and our timing was ideal. We are confident we can continue to leverage our first mover advantage,” said Qu.

In the pipeline

Qu also said the total solutions business was able to operate in a less crowded space than the module manufacturing arm, opening the opportunity for more growth in the future.

“In Japan, we expanded our pipeline of late-stage projects to 278MW DC. All of these projects have…feed-in tariff approval and are in stage one, two or three of the utility approval process. We expect to start building our first solar power plant there in the beginning of 2014,” said Qu.

The company also has an accumulation of projects in Canada.

“Our backlog of late-stage solar projects and EPC contracts in Canada now stands at around 500MW with an estimated revenue opportunity of over CA$1.7 billion once the projects are built and connected to the grid,” he said.

He added that a further 198MW of utility-scale projects in the US and another 40MW in China were further evidence of the expansion of the company’s business away from module manufacturing.

Michael G. Potter, CFO and senior vice president of Canadian Solar, said the company had many more early-stage developments brewing but said it was too soon to provide details.

“In China, our initial pipeline includes two solar power projects we are building totalling 40MW as well as the 30MW of Golden Sun projects we completed earlier this year.

“Although we generally do not detail early-stage projects as most do not become realisable projects, we are very active developing opportunities in Japan, China, United States, South Africa, Chile and Pakistan,” added Potter.

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