Diversified renewable energy firm Shunfeng International Clean Energy (SFCE) said it would continue to report losses for the first half of 2017, after full-year 2016 losses of over US$350 million.
A catalogue of issues had plagued SFCE in 2016, not least the eventual bankruptcy of US-based manufacturer Suniva, which was expected to generate losses of around US$16.3 million in 2016 after reporting losses of around US$7.4 million in the first half of the year as well as the impact of steep PV module ASP declines in the second half of last year.
Other issues in 2016 surrounded losses attributed to its downstream PV power plant business, due primarily to grid curtailment issues in China.
SFCE said that preliminary expected losses in the first half of 2017 were around RMB 330 million (US$49 million).
The company noted that further PV module ASP declines contributed to the expected losses in the first half of 2017, despite the sales volume of solar energy products increasing by approximately 25%, compared to the prior year period.
Product ASP’s were said to have dropped by approximately 24.5% as compared to the first half of 2016, which resulted in a decrease in gross profit from approximately RMB 991 million (US$147.2 million) with a gross profit margin of approximately 22% to approximately RMB791 million (US$117.5 million) with gross profit margin of approximately 16% in the first half of 2017.
SFCE also noted that it was also impacted by stopping the capitalization of a portion of interest expenses related to the construction of PV power plants in the first half of 2017. The finance costs of PV projects therefore increased by approximately 51% to RMB 687 million (US$102 million), compared to the first half of 2016, according to the company.