Canadian Solars end of year and Q4 financial results reflect the growth in the global solar market, as it posts record-breaking sales that surpassed expectations. The company took advantage of the opportunities presented to them, with rising profits and gross margin throughout the year, although the Q4 gross margin for 2015 was down slightly from the Q4 in 2014.
The biggest news from the report was the impressive solar module shipments, totaling over 4.7 GW for the year, of which 4,384 were recognized in revenue, compared to 2.8 GW in 2014. This was a record for the company, as was the 1,398 MW of module shipments recognized in revenue in Q4 of 2015, up from 1,150 MW recognized in Q3. The more than 4.7 GW of total solar module shipments in 2015 underscores the vast growth opportunities we see ahead in our key markets worldwide, said Canadian Solar CEO, Shawn Qu.
This rise in solar module shipments was reflected in the companys net revenue for the year, which totaled $3.47 billion, up from $2.96 billion in 2014. Net revenue for Q4 saw the most dramatic sequential rise, as it was up 31.8% to $1,120.3 million, compared to $849.8 million in Q3 2015. Interestingly, the net revenue for the companys total solutions business as a percentage of the total net revenue was also on the rise, climbing to 30.7% from 26.6% sequentially.
Equally important, we continue to make impressive progress in the buildout of our energy or total solutions business, with 398 MW of solar plants in operation, a late-stage project pipeline totaling 2.0GW in execution, and an early stage project pipeline of 8.3 GW in development, 2.6 GW of which is in the U.S. and will benefit from the recent ITC extension, stated Qu.
Boosting the bottom line
Achieving this impressive revenue rise was significant, but the biggest test would be to see if the company could compliment it with gross margin and profit rises, which it did manage sequentially, but not yearly. Gross profit declined slightly from $581 million in 2014 to $577 million in 2015, yet the fourth quarter profits in 2015 grew both Q/Q and Y/Y to $200.5 million, compared to $126.8 million in Q3, and $184.9 million in Q4 2014. However, it expects its costs of production to decrease during 2016 due to capacities coming online and as fewer external and OEM purchases are required, which could lead to an increased profit margin.
Canadian Solars gross margin was on the rise throughout the year, hitting 17.9% in Q4 2015, up from 14.9% in Q3 2014, but slightly down Y/Y from 19.3 in Q4 2014. Gross margin of 17.9% was above the high end of our guidance of 13% to 15%, driven by favorable currency trends that resulted in higher than expected average selling prices for our Module business and higher than expected margins in our Energy business, said Michael G. Potter, Canadian Solars Senior Vice President and CFO.
With the increase in activity, it is hardly surprising that the years operating expenses flew up to $329 million, from $215 million in 2014. As well as the increase in shipments, Q4 2015 was a busy period for the company, as it completed the sale of three solar power plants, valued at over $144.5 million, in Canada, as well the construction and tax-equity financing of all of its late-stage, utility-scale project pipeline in the U.S.
Canadian Solar remained busy, while entering the New Year, with an expansive solar project pipeline that totaled 10.3 GWp, which consisted of 2.0 GWp in late-stage development and 8.3 GWp in early- to mid-stage development. The largest portion of the pipeline remains in the U.S., but interestingly the company made large manufacturing expansions in Brazil and in China.
Continued growth is on Canadian Solars agenda for 2016, as the company plans to expand its manufacturing capacity further. It expects this to result in further record-breaking yearly module shipments, ranging approximately between 5.4 GW to 5.5 GW, with full year revenue forecasts between $2.9 billion and $3.1 billion. As we enter 2016, we expect to continue to grow both our module shipment volume and our downstream solar power plant business. However, our focus on the module side is really to upgrade our technology and to improve our cost structure through selected capacity investment, especially in the midstream solar cell part of the value chain, the company statement concluded.