Canadian Solar Records Big Growth in Module Shipments, Profit in Q3

Canadian Solar has reported big growth in all key business segments including growth in Module Shipments, Module Manufacturing capacity, etc in Q3.

Canadian Solar, one of the largest solar module manufacturers and project developers has reported its financial results for the 3rd quarter (Q3) of the financial year. The firm has reported big growth in all key business segments including growth in Module Shipments, Module Manufacturing capacity, Revenue, Projects Capacity, Profits, etc.

Key Highlights:

Total module shipments in Q3 grew by 33 percent year-over-year (yoy) and 9 percent quarter-over-quarter (qoq) to 3,169 MW driven by strong global demand growth. Of the total, 278 MW was shipped to the Company’s own utility-scale solar power projects. The firm shipped to more than 70 countries in the third quarter of 2020. The top five markets of the MSS business ranked by revenues were the U.S., Vietnam, Brazil, China and Japan. Canadian Solar Growth

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Net revenue grew by 20 percent yoy and 31 percent qoq to USD 914 million. Growth was driven by higher module shipments and project sales, partly offset by a lower module average selling price (ASP).

Gross profit in the third quarter of 2020 was USD 178 million, up 21 percent sequentially. Gross margin in the third quarter of 2020 was 19.5 percent, compared to guidance of 14 percent to 16 percent, and 21.2 percent in the second quarter of 2020. The gross margin decline was mainly driven by the previously anticipated module ASP pressure and increased manufacturing input costs, but the magnitude of the fluctuations was smaller than expected.

Dr. Shawn Qu, Chairman and CEO, said “I am pleased to report another strong set of results for the third quarter. We continued to focus on executing our strategy, overcoming market challenges and delivering long-term returns. During the third quarter, we took a major step forward with the successful pre-IPO equity raising of CSI Solar Co., Ltd. (“CSI Solar”), Canadian Solar’s MSS subsidiary, which received overwhelming support and participation from strategic partners as we secured the capital required to expand our capacity with the latest technology. We are well on track to achieve our target of submitting the official IPO application by the second quarter of next year.”

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Another highlight from the quarter was the firms’ first large scale energy storage system supply and service agreement, which officially positioned the firm in the solar plus energy storage market. 

“We expect energy storage will increasingly contribute to Company revenue and profit starting in 2021, setting the stage to become an important earnings driver going forward. Our integrated business model gives us the competitive advantage to deliver bankable, end-to-end solar plus energy storage solutions, which will unlock further growth opportunities,” Dr. Shawn Qu said.

The company’s total project pipeline, as of September 30, 2020, was 16.3 GWp, including, 1.3 GWp under construction, 3.8 GWp of backlog, and 11.2 GWp of earlier stage pipeline. The backlog includes projects that have passed their Risk Cliff Date and are expected to be built in the next one to four years.

Going forward, the firm expects that in Q4, total module shipments will be in the range of 2.9 GW to 3.0 GW, including approximately 350 MW of module shipments to the Company’s own projects that may not be immediately recognized as revenues. Total revenues are expected to be in the range of USD 980 million to USD 1,015 million. 

Interestingly, the firm has highlighted that it expects its gross margin to be between 8 percent and 10 percent, below its normal gross margins, reflecting the negative near-term impact of raw materials shortages, which have pushed up certain costs by approximately 50 percent to 100 percent, including polysilicon, solar glass and EVA, combined with higher shipping costs and unfavourable currency movements.