Canadian Solar misses Q2 shipment target, records further losses

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At the end of Q1 2012, the Canadian-Sino photovoltaic manufacturer predicted it would ship between 430 and 450 MW of modules in Q2. However, according to its latest results, just 412 MW were shipped. This compares to 343 MW in Q1 2012, and 287 MW in Q2 2011.

On the back of its sales, Q2 2012 net revenues reached $348.2 million, up from the $325.8 million made in Q1 2012, but down from $481.8 million in Q2 2011. For 1H 2012, net revenues fell from $925.2 million in 1H 2011, to $674 million.

Net loss continued to slide in Q2 2012, from $21.3 million or $-0.49 per diluted share in Q1 2012, and a net income of $7.1 million or $0.16 per diluted share in Q2 2011, to a loss of $25.5 million or $-0.59 per diluted share. In the first six months of the year, net loss amounted to $46.9 million, compared to an income of $12.9 million in 1H 2011.

Meanwhile, Canadian Solar recorded an operational loss of $3.1 million in Q2 2012 – an improvement on Q1 2012, which saw a loss of $13.5 million, but significantly down on the gain of $25 million in Q2 2011. In 1H 2012, an operational loss of $16.5 million was seen, compared to a gain of $59 million in 1H 2011.

Overall, the company’s operating margin was negative 0.9% in Q2 2012, compared to negative 4.1% in Q1 2012, and positive 5.2% in Q2 2011. Gross margin, on the other hand, was 12.4% in Q2 2012, up from 7.7% in Q1 2012 and down from 13.2% in Q2 2011.

Operating expenses for the quarter also increased, from 38.5 million in Q1 2012 and $38.7 million in Q2 2011, to reach $46.2 million. They further rose from $69.9 million in 1H 2011, to $84.8 million in 1H 2012.

Looking to Q3 2012, Canadian Solar expects photovoltaic shipments to be between 390 and 420 MW and gross margin to fall to 2 to 5%. "Management’s gross margin forecast takes into consideration potentially higher than usual inventory reserves in the third quarter due to the inventory brought in from the second quarter," wrote the company in a statement.

For 2012, it expects to see shipments of 1.8 to 2GW. It added, "While management sees a reasonably strong shipment pipeline for both the third and the fourth quarter, the volatile conditions of both the solar market and the macro economy have added uncertainties to the Company’s actual results. Canadian Solar may, as a result, update its guidance at a future time as developments warrant."