November 15 (Solar) – Canadian Solar Inc (NASDAQ:CSIQ) today reported an improved net attributable profit of USD 66.5 million (EUR 58.8m) for the third quarter of 2018 as margins went up.
The bottom line result compares to profits of USD 15.6 million in the second quarter of this year and USD 13.3 million in the year-ago period.
Net revenue at USD 768.0 million was below Canadian Solar’s guidance of USD 790 million-840 million. It rose from USD 650.6 million in the second quarter of 2018, but fell from USD 912.2 million a year ago. The average selling prices (ASPs) for modules were higher than expected but this positive effect was offset by the deferral of certain planned project sales, the company noted. The modules and systems solutions (MSS) business accounted for USD 512.3 million of revenues, while the energy business brought USD 255.7 million.
The company’s gross margin jumped to 26.1% from 24.5% a quarter ago and 17.5% a year ago. Excluding a countervailing duties (CVD) reversal benefit, gross margin was 25%.
“Our gross margin, excluding the CVD reversal benefit, was above our third quarter guidance [20%-23%], as we benefited from a slightly higher than expected module ASP, a higher margin project sale mix and ongoing cost controls across our operations,” said CFO Huifeng Chang.
For the MSS division the gross margin grew to 25.1% from 19% in the second quarter and 14.1% a year before. The energy division gross margin, however, fell to 28.2% from 54.7% in the second quarter and 31.6% in the third quarter of 2017. The energy division margin in the two previous periods included the realisation of deferred revenue associated with notice to proceed (NTP) sales in the respective quarters.
Canadian Solar’s photovoltaic (PV) module shipments shipments recognised in revenue in the third quarter stood at 1,521 MW, compared to 1,454 MW a quarter back and 1,782 MW a year back. The company’s forecast for the fourth quarter is for total solar module shipments of 1,670 MW to 1,720 MW, including roughly 170 MW of shipments to its own utility-scale solar projects that may not be recognised as revenue.
At the end of October, Canadian Solar had 2.9 GWp of late-stage, utility-scale solar projects, with the US, Brazil and Mexico as its top three destinations. Meanwhile, its portfolio of utility-scale solar assets in operation has reached 1.1 GWp, mainly in China, the US and India.
The solar energy major guided for fourth-quarter revenues of USD 690 million to USD 800 million, which would translate into a full-year top line of between USD 3.53 billion and USD 3.64 billion. Gross margin in the fourth quarter is seen at 24%-26%.
“Demand levels at our key markets will likely continue to fluctuate, and uncertainty remains for 2019. As such, we remain cautious in expanding capacity. But we believe that the longer-term prospect for solar energy is bright and, to differentiate, Canadian Solar will take the challenge of industry volatility as an opportunity to ramp up the volume for unconventional innovative products, such as bifacial, that command price premiums,” said CEO Shawn Qu.
(USD 1 = EUR 0.88)