Canadian Solar Sees Sunny Profits in First-Quarter 2014, Expects China to Become Biggest Solar Market

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Researched by Industrial Info Resources (Sugar Land, Texas)--Canadian Solar Incorporated (NASDAQ:CSIQ) (Kitchener, Ontario), a designer and manufacturer of solar products and one of the world's largest solar module producers, reported significant overall improvement in the first quarter of 2014, as module shipments and prices showed solid growth, and the total solutions business secured some major sales. The company reported net income of C$3.78 million, compared with a net loss of C$4.38 million in the first quarter of 2013.

Total revenues stood at C$466.32 million, compared with C$263.61 million in the same period last year, while solar module shipments totaled 500 megawatts (MW) during the first quarter, compared with 340 MW in first-quarter 2013. Global demand for modules was stronger than in most first quarters, which is typically the slowest quarter of the year, while selling prices improved. Although the production growth led to higher selling expenses, primarily from shipping and labor costs, the company was able to reduce operating expenses almost 25%.

Canadian Solar's total solutions business continued to prove to be profitable. Among the major successes for the company during the quarter was subsidiary Canadian Solar Solutions Incorporated's sale of the 8.5-MW Little Creek solar plant to a subsidiary of BluEarth Renewables Incorporated (Calgary, Alberta) for C$53 million. The subsidiary also sold the Westbrook and Oro solar plants, each 10 MW, to BlackRock Incorporated (New York, New York).

Canadian Solar's current pipeline of late-stage, utility-scale solar projects totals about 1.2 gigawatts (GW), including both joint-venture projects and those where Canadian Solar provides engineering, procurement and construction (EPC) services. Ontario alone hosts 453 MW of these projects, which is expected to bring in as much as C$1.7 billion in revenue. The U.S., China and Japan are hosting 151, 290 and 343 MW of late-stage, utility-scale solar projects, respectively.

Industrial Info is tracking more than US$1 billion in active projects involving Canadian Solar, including the US$60 million construction of the MightySolar PV Generating Station in Chesterville, Ontario. The project involves building a 10-MW solar facility that will supply renewable energy to the grid via Canadian Solar's CS6X Poly 280-300 photovoltaic panels. Renewable Energy Systems Canada (Oakville, Ontario) and Dillon Consulting Limited (Toronto, Ontario) are serving as contractors.

"In the U.S., currently one of the most attractive growth markets [for solar], we are also strengthening our position," said Dr. Shawn Qu, the chairman and chief executive officer of Canadian Solar, in a conference call. "In the first quarter, we expanded our marginal manufacturing capacity [at a major factory] to more than 500 megawatts, in order to supply the U.S. market, in addition to the Canadian market. I am delighted to announce that we are starting to shift significant volumes to the U.S. from this factory."

Canadian Solar executives expect revenues to total between $560 million and $590 million for the second quarter, and between C$2.7 billion and C$2.9 billion for the year. Module shipments are expected to be between 600 and 630 MW for the second quarter, and between 2.5 and 2.7 GW for the year. For the next several years, Canadian Solar executives expect China to be the world's biggest solar market, with 11 to 14 GW of module installations in 2014 alone. Japan also is recognized as a major growth market; although the permitting process is taking longer than expected, Canadian Solar managed to short-list buyers and EPC contractors for its first 11 MW of projects in the country.

"As we look into the future, we continue to see strong demand for our core products," Qu said.

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