Canadian Solar narrows Q1 loss as Asian business booms

Canadian Solar Inc. narrowed its net loss in the first three months of the year to $4.4 million, down from $21.3 million a year ago, while revenue fell 19.1% to $263.6 million.

The group’s solar module shipments were down slightly to 340 MW from 343 MW in the first quarter of 2012 and far below the 404 MW shipped in fourth quarter of last year.

Despite the decrease, Canadian Solar Chairman and CEO Shawn Qu was upbeat: "We are pleased with our first quarter results and our progress in the execution of our strategy."

Qu added that the group’s shipments of 340 MW exceeded initial forecasts of between 290 and 310 MW, while gross margin came in at the high-end of estimates.

The company continued the successful transformation of its business model from a leading module supplier into a leading solar power solutions company with a solid and growing utility-scale project pipeline in Canada, the U.S., China and Japan as well as a profitable and growing residential solar system kits business in Japan, Qu said.

Canadian Solar’s total solutions business represented 19.2% of its revenue compared to 12.8% in the fourth quarter of 2012.

Qu said the company was expanding its business in Japan. "We are well positioned in the high-margin and long-term sustainable residential rooftop kits business as well as the high-volume commercial project market. Our strong market position is also helping us to develop our own utility project pipeline, which we expect will become a meaningful part of our business in the quarters ahead."

The group has also maintained its strong position in the Southeast Asia market, including India and Thailand, Qu added.

Indeed, the group’s Asian business grew strongly in the first three months of the year, while sales in Europe and North America dropped significantly.

First quarter sales to European markets represented 24.7% of the company’s net revenue, while North American business accounted for 17.9%, with Asia and all other markets making up the remaining 57.4% of net revenue, compared to 40.6%, 20.0% and 39.4%, respectively, in the fourth quarter of 2012 and 42.6%, 45.1% and 12.3%, respectively, in the first quarter of 2012.

The company expects shipments to Japan to account for approximately 35-40% of total module shipments in the second quarter. It’s also looking to make further inroads into key emerging markets in Southeast Asia.

In Europe, Canadian Solar has been shipping modules to customers from its factory in Guelph, Ontario, and thus avoiding the risk of retroactive anti-dumping tariffs on solar products manufactured in China.

Michael G. Potter, Canadian Solar’s senior vice president and chief financial officer, said the company "took a conservative approach to Europe in the first quarter and essentially halted module shipments directly to Europe from China in March pending further clarity around the potential tariff structure. We were able to do this without much impact to our original shipment and margin target due to our successful diversification into Canada, Japan, the U.S. and other markets."

The group’s manufacturing base in Canada has allowed it to continue reduced volume shipments to European customers, Potter added.