Solar glass provider Xinyi Solar has issued a profit warning after the price of solar glass fell and the price of key components and energy inputs rose.
In a statement issued to the Hong Kong stock exchange, Xinyi said the company’s net profit for H1 2022 is expected to decrease by 33% to 43% compared to H1 2021.
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“Such [a] decrease is primarily due to the decrease in the profitability of the solar glass business of the Group,” said Xinyi Solar.
Last year, the Wuhu, China-based company saw its net profits more than double in H1 2021 to HK$3.072 billion (US$394.9 million), leading the company to describe its performance in the first half of the year as “spectacular”.
It did, however, warn that weaker demand and lower prices for solar glass will dampen its results in the second half of the last year and through to 2022.
Xinyi Solar said its profitability had taken a hit because of a 10 – 20% year-on-year decrease in the average market price of solar glass products of the Group in H1 2022 as compared to same period in 2021. It said that prices had remained “exceptionally high” in Q1 2021 but had started to fall in Q2.
Furthermore, “significant increases” in the costs of raw materials, such as soda ash, and the higher price of energy has also helped to depress profits, said Xinyi Solar, adding “the above adverse factors were partially offset by the Group’s achievement of high sales volume and improved production efficiency”.
The years 2020 and 2021 were a bonanza for solar glass producers, with revenue and profits soaring. But, following government lobbying from major module manufacturers, claiming prices for solar-grade glass were “out of control”, the Chinese government implemented a series of policies designed to bring more capacity online and control price inflation.
Meanwhile, Xinyi Solar entered the polysilicon game last year. In a statement issued to the Hong Kong stock exchange, where it is listed, the boards of both Xinyi Solar and parent company Xinyi Glass confirmed that they had agreed to establish Xinyi Silicon, an entity 52% owned by Xinyi Solar, to develop polysilicon production facilities in China, backed by RMB3.3 billion (US$517 million) in funding.
The board of Xinyi Solar said the full financial results of the group will be published before the end of August 2022.