PV manufacturer and project developer Canadian Solar has been proven true to its word as it posted a swift return to profitability in the last quarter, following the US$17.2 million loss recorded in the first three months of the year.
Net income for the April-to-June period came in at US$62.7 million and the turnaround came thanks to a relentless bid to drive down costs, with operating expenses accounting for 11.8% of revenue, according to chief financial officer Huifeng Chang, down from 20.8% in the previous three-month period. Canadian Solar also sold off US$47.3 million of its inventory, added Chang.
Interestingly, the quarterly update added the manufacturer had also benefited from slightly higher than expected module selling prices, as well as from foreign exchange gains as the U.S. dollar recovered strength against the renminbi amid the China-U.S. trade war.
Project windfall in prospect
The established model of selling off projects saw Canadian Solar dispose of 228 MWp of assets in the U.S. (134 MWp), Mexico (68 MWp), China (20 MWp) and Namibia (6 MWp) and the good news for shareholders is that a planned sale of the developer’s 80% holding in a 482.6 MWp portfolio in Brazil has not even gone through yet.
That transaction is likely to be the unspecified project deal which would hike Canadian Solar’s revenue expectations for the current quarter from US$780-810 million to US$970 million-1 billion – with gross margin guidance of 24-26% potentially rising to 27-29% if the deal is signed in time. Either way, the Ontario-based company expects to record US$3.5-3.8 billion in revenue this year, on the back of 8.4-8.5 GW of module shipments, with 2.2-2.3 GW of product set to leave factories in the current reporting period.
The business continued with its production capacity expansion plans during the quarter, raising annual cell output to 7.8 GW and surpassing plans to hit 9,130 MW of module capacity to actually reach 9.4 GW. Canadian Solar intends to have 9.3 GW of cell capacity by the end of the year and 11.2 GW of module output.
And there was further good news on the module front, with the company announcing it intends to complete the transition to entirely PERC-based (passivated emitter rear contact) products this month.
All of which lends some credibility to chief executive Shawn Qu’s typically pugilistic statement that Canadian Solar was in “the most competitive position in the company’s history”.