Highly diversified Chinese renewable energy company SFCE has recorded losses across a number of its subsidiary companies in 2016. The outlook, published today, is significantly gloomier than the anticipated loss of 923 million yuan it announced in early January. The Chinese company attributed the revised forecast to a number of factors.
It expects to book an impairment loss of roughly 259 million yuan on its October 2015 investment in U.S. solar panel manufacturer Suniva, in addition to roughly 228 million yuan of the Georgia-based company’s potential financial liabilities. SFCE owns a 63.13% stake in Suniva.
Lower average selling prices (ASPs) for PV modules – particularly in the U.S. market, where Suniva primarily operates – also eroded SFCE’s earnings in 2016. The impact of lower ASPs was exacerbated by a rise in shipments of modules to the U.S. by undisclosed suppliers in Southeast Asia, SFCE claims, further driving down the price at which Suniva sells its products in the country.
In addition, SFCE expects to record an impairment loss of about 222 million yuan related to its investment in a number of undisclosed solar projects that are still being built.
“Due to unexpected delays in the construction of certain solar power plants, the relevant construction permits have expired and the construction of those solar power plants have ceased,” the diversified renewables group said in a statement to the Hong Kong stock exchange.
It did not elaborate on the performance of its downstream solar project business. Its total installed PV capacity hit 681.9 GW at the end of the first half of 2016.
For the full year, SFCE also recognized an impairment loss of roughly 143 million yuan related to its investment in German PV group SAG Solarstrom.
“It is expected that the SAG interests will no longer bear any benefit of synergies, revenue growth, future market development and assembled workforce in the foreseeable future,” SFCE said.
In addition, SFCE recorded a 187 million yuan loss for its Lattice Power unit, up from 135 million yuan a year earlier, on top of a related impairment loss of 550 million yuan. Lattice Power’s anticipated $19.5 million loss in 2016 will also dent SFCE’s profitability, as it holds a 59% stake in the U.S. semiconductor supplier.
And in a further blow to its 2016 earnings, SFCE said its financing costs jumped by 12% year on year to 332 million yuan.
The group also expects to record a loss of 484 million yuan related to bad debts, from an initial forecast of 160 million yuan.
However, all figures remain preliminary, as it has yet to finalize its results for the full year
SFCE – which recorded a profit of about 58 million yuan in 2015 – has rapidly expanded its renewables business in recent years through a series of ambitious acquisitions.
Last July, it revealed plans to sell its PV manufacturing assets in China to Hong Kong-based Asia-Pacific (China) Investment Management for roughly $760 million, so it could deepen its focus on its downstream business.
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