Shunfeng International Clean Energy (SFCE) has today issued a stark profit warning via a preliminary financial assessment publication that reveals an 80% decrease in first-half (H1) 2016 profits compared to H1 2015.
Last year over the same period the renewables firm posted net profit of RMB 172.5 million ($25.8 million), but has warned shareholders that things are not looking so rosy this time around.
The SFCE group pinned the blame for its expected profit slump on two key factors, chiefly the curtailment of a number of its completed solar PV projects, and heavy losses accrued following the acquisition of clean energy firms Suniva and Lattice Power.
The grid curtailment issues currently bedeviling large portions of China have crept on to Shunfengs balance sheet, with the company confirming that as much as RMB 246 million ($37 million) in revenue has been lost due to its inability to connect up to 330 MWh of completed solar PV capacity.
The October investment in Suniva which saw SFCE acquire 63.13% of the company also weighed heavy on its books, with Shunfeng sharing the loss of RMB 44 million ($6.5 million) during H1 2016. No such losses were present at the same period last year, the company said.
Further, the acquisition of 59% of the equity interests of Lattice Power Corporation also meant that RMB 100 million ($14.9 million) was struck from the final revenue figure.
Shunfeng also saw its finance costs increase by 60% year-on-year due to the continuation of new loans required to finance its ongoing solar power development operations, many of which were completed in the first half of 2016.
Finally, Shunfeng was able to recoup a larger portion of non-recurring income collected on bad debts in H1 2015 than it did this year clawing back RMB 430 million and RMB 70 million in H1 2015 and H1 2016 respectively.
Shunfeng was unable to say with any great certainty when the injurious curtailment issue will be resolved, but did add that the audited first half financial results will be released in August.
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