Canadian Solar Exceeds Q1/2020 Revenue Guidance

After Good Run In Q1/2020, Canadian Solar Retains Full Year 2020 Shipment Guidance But Withdraws Annual Financial Guidance Due To COVID-19 Related Uncertainty
03:55 AM (Beijing Time) - 30. May 2020

Canadian Solar has revised downwards its production expansion plans to save on capital expenditures keeping in mind the global market uncertainty due to the pandemic. Still, it maintains its 2020 module shipment guidance of 10-12 GW.

Key Takeaways

  • Canadian Solar’s Q1/2020 revenues exceeded guidance with top 5 markets markets being the US, Brazil, Japan, Spain and the Netherlands
  • Company increased its inventory to 92 days, majorly to qualify for US ITC
  • Manufacturing plans have been altered due to pandemic related uncertainties
  • 2020 revenue guidance has been withdrawn but company has reiterated its full year shipment guidance

Chinese solar power company Canadian Solar Inc (CSI) managed to dodge the negative impact of COVID-19 pandemic in Q1/2020 even as some of the majorly affected economies of the world were its major revenue generators. The US, Brazil, Japan, Spain and the Netherlands were the top 5 markets of its module and system solutions (MSS) business.

In all, the company shipped a total of 2.2 GW of modules to more than 80 countries, achieving the higher end of its guidance for the quarter: It improved annual revenues by 70% to $826 million, thus exceeding its guidance, due to higher module shipments and project sales, which was partially offset by a decline in ASPs. Management also reported net income of $110.6 million compared to net loss of $17.2 million in Q1/2019.

At least 72% of total module shipments comprised multicrystalline modules and the remaining 28% share came from monocrystalline modules. This makes the company the only major vertically integrated module maker still relying mostly on multi crystalline technology. Canadian Solar increased its inventory level to 92 days in the reporting quarter, mainly in the US to qualify for the solar investment tax credit (ITC) and applicable tax credit percentage.


Canadian Solar had shared plans to expand its manufacturing capacity for ingot, cell and modules in March 2020, but with the market situation currently due to the pandemic, it has lowered the expansion targets to be achieved till December 2020 with a view to save on capital expenditure. For modules, the target was 16.05 GW from 13.04 GW till March 2020-end, which has now been brought down to 15.05 GW. For cells the expansion deduction is negligible,  by 100 MW to 10 GW, while for ingots the previous target of 2.35 GW has now been scrapped completely to retain current levels of 1.85 GW.

The management did say that these plans are not set in stone and can be changed anytime soon.


At the end of March 2020, its total project backlog and pipeline was a total of 15.7 GW of which 3.7 GW was the backlog comprising projects that need to be built in next 1 year to 4 years, and 12 GW in the pipeline. For its solar and storage plans, the Chinese company said it is in advanced discussions with a number of off-take parties. Till the end of Q1/2020, Canadian Solar’s storage project backlog and pipeline was a total of 2.82 GW.

Roth Capital Partners called the company’s 5-year plan for its energy business a positive where Canadian Solar plans to achieve sales of 3.6 GW to 4.1 GW in 2024 and retain ownership of a cumulative 960 MW by that time. “We applaud management’s detailed five-year energy segment plan, and, over time, we expect this to attract more investors as the retained MW serve as a ballast offsetting the lumpiness of project sales. We see the potential establishment of a vehicle to buy projects as a medium term catalyst,” said Roth analyst Philip Shen.

CSI Chairman and CEO Dr Shawn Qu said, “We also note the accelerating development of the solar plus storage market, which we expect will become a more meaningful contributor to our future revenue growth. Over the longer term, we remain well-positioned for continued success as solar power achieves grid-parity in an increasing number of markets.” Adding, “We will continue to benefit from our diversified revenue and manufacturing base, healthy balance sheet and liquidity, and strong relationships with customers, suppliers and financing partners.”


Basing its guidance for Q2/2020 on existing the market and internal assessment including its order book, Canadian Solar forecasts module shipments in the range of 2.5 GW to 2.7 GW with total revenues expected as between $630 million to $680 million with gross margin expected to be around 18.5% to 20.5%.

Assessing the uncertainty caused by the pandemic for business conditions in H2/2020, Canadian Solar has withdrawn its 2020 annual financial guidance of $3.4 billion to $3.9 billion. Nonetheless, full year shipment guidance of 10 GW to 12 GW has been retained.

CEO Qu acknowledged that declines in module and input material ASPs due to the pandemic has led to uncertainty with respect to profit margins, not to forget timing for some project sales originally scheduled for 2020. He was confident of this as being a temporary phase with brighter long term prospects for the company and the global solar industry. The future strategy is now focused on preserving cash and minimizing risk.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani