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Issue #588

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Intermodalism

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2014 Media Kit
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Canadian Solar says projects to offset US duties impact

By: | at 03:03 PM | International Trade  

Canadian Solar Inc said it expected its more profitable business of building solar power plants to help blunt the impact of a fall in margins in the United States due to the imposition of duties on solar products made in China and Taiwan.

The United States last month extended tariffs against China-made solar products to those made in Taiwan, plugging a loophole that allowed Chinese solar companies to use factories in Taiwan to bypass the duties.

Canadian Solar was using factories in China to ship products to the United States and the company’s margins had shrunk after the duties were levied, Chief Executive Shawn Qu said on a conference call.

Qu said lower margins in the United States would be offset by higher revenue and profits in its solar projects, or total solutions, business.

Canadian Solar forecast gross margins of 19-21 percent for the current quarter ending September, compared to 19 percent in the second.

The company said it expected project business’s share in revenue to rise to more than 50 percent in the second half of the year from about 33 percent in the second quarter.

Guelph, Ontario-based Canadian Solar plans to build plants “overseas” to cater to the U.S. market, Qu said, echoing smaller rival ReneSola Ltd.

But for now, Canadian Solar is banking on markets such as Japan, Canada, China and Europe.

The company said it expected panel shipments to rise to 720-750 megawatts (MW) in the third quarter from 646 MW in the second.

Quarterly Profit

Higher shipments and selling prices for its panels, along with strong demand and prices for solar projects, helped the company report a profit in the second quarter ended June 30.

Canadian Solar said its projects business was benefiting from the recent launch of several yield cos, but it expects to make a decision about forming its own yield co only in 2015.

A number of solar companies have bundled some solar plants and spun them off into yield-paying public companies.

Canadian Solar forecast revenue of $760 million to $810 million for the third quarter, compared with the average analyst estimate of $784.8 million, according to Thomson Reuters I/B/E/S.

Net income attributable to the company was $55.8 million, or 95 cents per share, in the second quarter, compared with a net loss of $12.6 million, or 29 cents per share, a year earlier.

Revenue jumped 64 percent to $623.8 million. (Reuters)