Canadian Solar Shares Plunge On Expected Lower 2019 Revenues Despite Better Than Expected 2018
Canadian Solar, one of the world’s leading solar manufacturers, saw its shares plunge 20% last week after the company announced that it expects its net profit for 2019 to be lower than in 2018, despite better than expected fourth-quarter earnings and yearly shipments in line with guidance and past performance.
Canadian solar published its Fourth Quarter and Full Year 2018 financial results last week, revealing total solar module shipments for the fourth quarter of 1,951 megawatts (MW), compared to 1,590 MW in the third quarter of 2018 and 1,831 MW in the fourth quarter of 2017, and in line with the company’s revised fourth quarter guidance of 1.9 gigawatts (GW) to 1.95 GW.
Total solar module shipments for 2018 amounted to 6,615 MW, down slightly from the 6,828 MW recorded in 2017 but well in line with the company’s revised full-year guidance in the range of 6.56 GW to 6.61 GW.
Revenue for the fourth quarter hit $901 million, up significantly on $768.0 million in the third quarter of 2018 but down slightly on the $1.1 billion taken in during the fourth quarter of 2017, and again in line with the revised fourth quarter 2018 guidance of $850 million to $900 million. Net income attributable to shareholders was $111.6 million, or $1.81 per diluted share, while non-GAAP adjusted net income was $99.5 million, or $1.61 per diluted share, beating market expectations by $0.45.
Total net revenue for 2018 amounted to $3.74 billion, up on the $3.39 billion taken in during 2017 and hitting the high end of the company’s revised full-year guidance in the range of $3.69 billion to $3.74 billion.
“2018 was a record year for us as our revenue, total module shipments and gross margin all exceeded our expectations for both the fourth quarter and full year 2018,” said Dr Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar. “We had an exceptional year in 2018, with close to 140% growth of net profit from the 2017 level. This clearly demonstrated our global leadership position, the winning model of our solar project business, and the benefits of our manufacturing business strategy.”
Despite this record year, investors were unimpressed with Canadian Solar’s outlook for 2019. The company expects total solar module shipments to be in the range of approximately 7.4 GW to 7.8 GW. However, it is the company’s expectations for its net profit which soured investors, with Canadian Solar predicting that “its net profit for 2019 [will] be lower than 2018.” Specifically, full-year revenue is expected to be in the range of $3.5 billion to $3.8 billion, reflecting the impact of an expected lower module Average Selling Price (ASP) and lower revenue from solar project sales.
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