Canadian Solar Feeling Bite Of Falling Solar Prices
Canadian Solar published its fourth quarter and full-year 2016 financial results this week, and despite impressive and record-high shipment figures, the company finished the year well behind on revenue due in part to the massive cost declines we have seen in the global solar industry.
At first glance, Canadian Solar’s fourth quarter financial results might not look all that desperate, and would certainly not explain the 11% share price collapse following the company’s report. The company set a record high shipment of solar modules of 1,612 megawatts (MW), of which 1,581 MW was recognized in the company’s revenue (the remainder funneled to the group’s own downstream business). This compared healthily to the 1,161 MW recognized in revenue for the third quarter, and was at the high end of the company’s own guidance for the quarter. The resulting revenue was similarly strong, sitting at $668.4 million compared to $657.3 million in the previous quarter, and in the mid-range of the company’s guidance.
All good so far, except, as we look at Canadian Solar’s efforts in the fourth quarter as part of the larger whole, the company simply wasn’t able to do enough to stave off a massive drop-off in its full-year revenue.
Total module shipments for Canadian Solar in 2016 were a record high of 5,232 MW, well up on the 4,706 MW shipped in 2015. However, conversely — and seemingly counter-intuitively — net revenue for the year was $2.85 billion, down compared to the $3.47 billion taken during 2015.
“Results for the fourth quarter and full year 2016 were inline with our expectations, other than the unfavorable preliminary ruling on AD/CVD rates by U.S. Department of Commerce,” said Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar. “We achieved record high total solar module shipments in the fourth quarter and the full year 2016. Despite strong demand levels, our revenue for both the fourth quarter and full year was lower compared to the prior year’s periods due to the industry-wide declines in average selling price that have been persistent all year.”
The decline in solar pricing has been the looming question over the industry for over a year now, and while demand seems to be reaching ever-more impressive levels, this is partly due to the decline in solar pricing, making it ever-more affordable and more cost-efficient.
Canadian Solar is not the first solar manufacturer to be suffering the effects of this price decline, nor will it be the last. We can expect to see similar oddities such as record shipments but low revenue for many quarters to come.
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