20% Annual Revenue Growth For Canadian Solar In Q3/2020

Canadian Solar Exceeded Revenue & Shipment Guidance In Q3/2020; Announces Manufacturing Capacity Expansion; Expects Q4/2021 Gross Margin To Be Impacted By Raw Material Shortage
08:42 PM (Beijing Time) - 20. November 2020
Presentation1

Canadian Solar said all its manufacturing capacity expansion planned for 2021 will roll out its next generation, high-power, high-efficiency modules in HiKu and BiHiKu product portfolios with 500W+ and 600W+ modules.

Key Takeaways

  • Canadian Solar scored well on most parameters in Q3/2020 financials, exceeding its revenue and shipment guidance
  • It has narrowed its 2020 full year module shipment guidance to 11.2 GW to 11.3 GW, and reiterated full year 2021 shipment guidance of 18 GW to 20 GW
  • It has released its manufacturing capacity roadmap for the next year aiming for total module production of 25.7 GW
  • Management expects energy storage will increasingly contribute to its revenue and profits, starting from 2021

Canada headquartered Chinese solar power company Canadian Solar Inc. expects raw materials shortages to drive down its gross margins to between 8% to 10% in Q4/2020 below its normal gross margins. The management explained that the shortage has already pushed up certain costs for polysilicon, solar glass and EVA by around 50% to 100%, compounded by higher shipping costs and unfavorable currency movements.

“While we benefit from the sharp recovery of global solar demand since July, this also caused input material shortages,” said President of Canadian Solar’s Module and System Solutions (MSS) subsidiary CSI Solar Co., Ltd., Yan Zhuang while referring to the raw material shortages. “As a result, we are expecting pressure on our short-term profitability. We are taking active measures to mitigate these micro and macro factors. Over the longer term, however, we believe these changes will ultimately favor Canadian Solar as a market leader with a differentiated technological offering, strong brand and market leadership position.”

Nonetheless, the integrated PV manufacturer has reiterated its full year 2021 shipment guidance of 18 GW to 20 GW. Yet, it has narrowed its full year 2020 module shipment guidance to 11.2 GW to 11.3 GW, compared to previously guided 11 GW to 12 GW (see Canadian Solar Exceeds Shipment Guidance In Q2/2020).

During Q4/2020, the management has guided for its total module shipments to fall within the range of 2.9 GW to 3.0 GW, with revenues of $980 million to $1.015 billion.

Q3/2020

The company shipped 3.2 GW modules during this quarter exceeding its guidance of 2.9 GW to 3.1 GW, and reporting 33% annual growth thanks to strong global demand growth. Higher module shipments and project sales, partly offset by a lower module ASP increased its revenues by 20% annually to $914 million, again exceeding guidance. Its gross margin was 19.5% with net income of $8.8 million.

Manufacturing

Canadian Solar shared its manufacturing capacity expansion plans to grow its ingot capacity to 10 GW by 2021-end. For wafer, the production capacity will be increased to 11.3 GW, for cell to 18.2 GW, and module to 25.7 GW by the end of next year. All of this capacity will produce its next generation, high-power, high-efficiency modules in HiKu and BiHiKu product portfolios with 500W+ and 600W+ modules it launched this year (see Canadian Solar Enters 500W+ Module Club and Canadian Solar Launches 600W+ Solar Module).

“CSIQ is planning its capacity expansion to accommodate both the 182mm and 210mm formats, rather than limiting itself to one standard or the other. The new formats could lead to higher pricing and lower costs over time and support the margin expansion expected in the back half of 2021,” commented Philip Shen of Roth Capital Partners.

In October 2020, Canadian Solar completed its solar plus storage system installation for a Goldman Sachs project in California making it the company’s 1st large scale energy storage system supply and service agreement (see Canadian Solar Closes Deal With Goldman Sachs). The management said going forward energy storage will increasingly contribute to its revenue and profit, starting in 2021.

Going by massive capacity expansions by most tier I manufacturers, PV InfoLink analysts caution that by the end of 2021 total cell and module capacity will reach 366 GW and 377 GW respectively, meaning overcapacity in the market vis-à-vis the demand forecast of 143.7 GW it expects for next year (see PV InfoLink Warns Of Cell & Module Overcapacity In 2021).

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani