Canadian Solar reported financial results above its guidance for the second quarter of 2016 thanks to strong demand. The company is still targeting at ramping up its solar operating assets globally yet has decided to terminate YieldCo plan.
Highlights
In 2Q16, Canadian Solar’s total module shipments recognized in revenue were 1,290MW, above the guidance of 1,200~1,250MW, and compared to 1,172MW in 1Q16 and 809MW in 2Q15.
The net revenue in 2Q16 of US$805.9 million was above of its guidance of US$710~760 million and was up 11.7% from US$721.4 million in the previous quarter and 26.6% up from US$636.7 million in the same quarter of 2015.
By region, sales to the Americas represented 47.6% of net revenue, Asia of 39.5%, and Europe and others of 12.9%. Net revenue share for the Americas increased from 43.1% in 1Q16, while for Asia decreased from 44.4% in 1Q16 and 45.5% in 2Q15. Canadian Solar relied moderately on the Asian market.
The gross profit in 2Q16 was US$138.5 million, up from US$112.5 million in 1Q16 and US$96.5 million in 2Q15. Gross margin increased from 15.6% in 1Q16 and 15.2% in 2Q15, respectively, to 17.2%, which was also better than the 15~17% guidance. The sequential increase in gross margin was primarily due to lower module manufacturing cost, stated Canadian Solar.
Net income attributable to Canadian Solar was US$40.4 million, or US$0.68 per diluted share, in 2Q16, compared to net income of US$22.6 million, or US$0.39 per diluted share, in 1Q16, and net income of US$17.9 million, or US$0.31 per diluted share, in 2Q15.
Capacity
Canadian Solar expects to increase its wafer capacity using new diamond wire-saw technology. This technology works compatibly with our proprietary Onyx black silicon multi-crystalline solar cell technology, significantly increasing solar cell efficiency while reducing silicon usage and therefore manufacturing cost. The Company's wafer manufacturing capacity is expected to reach 1.3 GW by the end of 2016, of which at least 900MW is expected to utilize diamond wire-saws.
A tornado damaged Canadian Solar’s cell factory in Funing County Jiangsu Province on June 23, resulting in an approximately 1GW capacity reduction to the company. Nonetheless, with new capacity to be commissioned in September, Canadian Solar expects to reach 3.05GW of cell capacity by the end of 2016, including the new 850MW cell manufacturing plant located in South Eastern Asia.
On the contrary, Canadian Solar has decided to slow down module capacity expansion and expected to reach 5.8GW of module capacity by the end of 2016, down from previously disclosed 6.4GW. Meanwhile, 650MW in South Eastern Asia and 360MW in Brazil were and will be commissioned gradually during 2016.
Assets adding
Canadian Solar has officially terminated its YieldCo plan but will focus more on creating value for shareholders from its operating assets, stated Shawn Qu, Chairman and CEO of Canadian Solar.
“Our energy business now has approximately 472 MWp of solar power plants in operation, and approximately 900 MWp of additional solar power plants, after adjusting for our effective ownership, that will reach commercial operation in the second half of 2016,” said Qu. “Once completed, we will own approximately 1.37GWp of operating solar power plants, with a resale value of approximately $2.1 billion.”
Canadian Solar currently owns a utility-scale solar project pipeline of 20.4GWp, of which 2.4GWp are in late-stage development and 18GWp in early- to mid-state development. Among the projects in late-stage development, 1,263MWp are in the U.S., 576MWp are in Japan, 384 MWp are in Brazil, 121 MWp are in China, 63 MWp are in Mexico, and 19 MWp are in the United Kingdom.
