Canadian Solar posts narrower-than-expected Q1 loss

By Arup Roychoudhury

BANGALORE (Reuters) - Canadian Solar Inc posted a narrower-than-expected loss for the first quarter and forecast sequentially higher second-quarter shipments.

"We expect our second-quarter shipment level will be significantly higher than that of the first quarter, reflecting improved solar installation levels around the world and increased demand for our high-quality and cost-competitive solar products," the solar cell maker said in a statement.

Canadian Solar, however, cut its full-year shipments to a range of 200 to 220 MW, down from 300 to 350 MW it had forecast earlier, and adjusted its net revenue outlook to reflect the change.

The company, however, did not give a specific figure.

Previously, the company said it expected 2009 revenue between $600 million and $800 million.

"I think there is an uncertainty regarding visibility in demand in the solar industry in general," Canaccord Adams analyst Jonathan Dorsheimer said by phone.

Earlier this month, GT Solar International Inc forecast full-year profit below market view, while Energy Conversion Devices Inc declined to provide its fourth-quarter outlook, citing poor visibility.

Dorsheimer said average selling prices for the industry, going ahead, would also be weak.

"There is still a significant oversupply in the industry for the current level of demand, so for the next year the pricing is going to be rather difficult," Dorsheimer added.

He, however, added that a drop in polysilicon prices, which are the raw materials for solar panels, would help companies offset a drop in pricing of the finished products.

CO SEES MARGIN RECOVERY

In a conference call with analysts, Chief Financial Officer Arthur Chien said the company expects some sequential recovery in margins in the second quarter as it was working through higher-priced inventories and implementing cost controls.

Chien forecast second-quarter margins in high single digits and said the company aims to reach mid-teen margins by either the third or the fourth quarter.

The CFO also added that Canadian Solar's credit facility with some local Chinese Banks is expected to increase.

In April, the company said it signed agreements with three Chinese state banks to provide it with up to 15 billion yuan ($2.20 billion) in potential credit facilities to finance domestic and overseas solar projects.