- Aiko Solar sees H1/2021 business to report net loss of around RMB -30 million to RMB -20 million
- It attributes this expected loss to high prices of raw materials in the solar supply chain which pushed up its production costs
- Management also believes there is a wait-and-watch approach among downstream customers at the moment as they wait for prices to stabilize
Solar cell manufacturer from China, Aiko Solar expects to report a net loss for the period during January 2021 and June 2021 amounting to a total of around RMB -30 million to RMB -20 million ($-4.64 million to $-3.1 million), as per its preliminary assessment of the business.
It added that the net loss attributed to shareholders of listed companies, after deducting non-recurring gains and losses is estimated to be between RMB -13 million and RMB -12 million ($-2 million and $-1.86 million).
According to the company, this negative impact on the business was mainly due to increase in raw material prices, especially raw silicon for wafer manufacturing making supply of wafers too tight during the period, which pushed up purchase costs and therefore its production costs as well.
“The slow transmission of cost pressures to downstream customers has led to a significant drop in the gross profit margin of the main business,” it stated.
The rise in prices is inhibiting downstream demand due to which it has had to curb its capacity utilization rate. More and more downstream customers are now adopting a wait-and-watch approach for prices to stabilize, resulting in slower sales for the company.
Aiko Solar’s profitability suffered an impact back in H1/2020 as well due to COVID-19 related disruptions (see Aiko Solar’s Net Profitability Down 68% YoY In H1/2020).
The raw material shortage is a reason many companies are citing as a major business challenge in the global solar industry of late, and its impact is quite visible in the entire global supply chain (see Tight Raw Material Supply Pushing Up PV Module Prices).