* Canadian Solar forecasts lower shipments, margins for
* Canadian Solar shares down 6 pct
* Trina, Yingli estimate second-quarter gross margins of
* Yingli says second-qtr panel shipments up 23-24 pct, vs
* Trina estimate quarterly panel shipments of 630-660 MW
Aug 8 Canadian Solar Inc forecast lower
shipments and margins for the current quarter as its market
share shrinks in the European Union, the biggest solar market
where the EU plans to cap imports of cheap solar panels made in
Shares of the company, most of whose manufacturing
operations are in China, were down 7 percent at $13.26 on the
Nasdaq on Wednesday.
Canadian Solar said it expects to ship between 410 megawatts
(MW) and 430 MW of solar panels in the third quarter, lower than
the 455 MW it shipped in the second.
The company forecast gross margin of 10-12 percent for the
third quarter, lower than nearly 13 percent in second quarter.
Canadian Solar's sales to Europe slumped by about 83 percent
in the quarter ended June, accounting for less than 11 percent
of its second-quarter revenue of $380.4 million. Europe
accounted for nearly 70 percent of the company's revenue a year
The company said it was adopting a "conservative approach"
in Europe. It does not expect any growth in shipments to Europe
in the third quarter.
"It does not surprise me in the least that they would guide
to a slower third quarter as compared to second quarter," said
Raymond James analyst Pavel Molchanov.
"Second quarter had considerable 'pre-buying' in Europe
ahead of the feared European tariff that could have pushed
Chinese module prices in Europe up almost 50 percent," he said.
Canadian Solar's rivals Trina Solar Ltd and Yingli
Green Energy Holding on Thursday said they expect
second-quarter shipments and gross margins to be higher than
their forecasts on the jump in sales in Europe.
China and European Union struck a deal last month to
regulate Chinese solar panel imports. The fine print of the
agreement is yet to be disclosed, but a EU source told Reuters
that Chinese firms could sell into Europe at a minimum price of
56 euro cents per watt, close to the market price.
China's shipments to EU, however, will be capped at 7
gigawatt (GW) per year, around half of the EU's 2012 demand of
"Given last month's EU-China trade deal, needless to say the
pre-buying has come to an end," said Molchanov.
Canadian Solar, like its rivals, is trying to make up for
the loss of market share in Europe by tapping more lucrative
markets such as Japan.
Higher sales to the fast-growing Japanese solar market
helped the company halve it second-quarter loss, prompting the
company to forecast profitability on a full-year basis in 2013.
The company has reported losses for the last two years.
Japan accounted for nearly 36 percent of Canadian Solar's
total solar panel shipments in the second quarter. Shipments to
the Asian country nearly doubled from the first quarter.
Japan, however, will not fully compensate for the loss of
market share in Europe, meaning that Canadian Solar will have to
sell more in China and other emerging Asian markets, where panel
prices are among the lowest in the world.
Increased revenue from the company's higher margin total
solutions business - covering everything from the making of
solar cells to installation of solar plants - also helped the
company cut losses in the second quarter.
Canadian Solar estimated that the resale value of its
Ontario project pipeline, once built into grid-connected solar
power plants and sold to investors, will exceed C$1.50 billion
The company's net loss narrowed to $12.6 million, or 29
cents per share, in the quarter ended June from $25.5 million,
or 59 cents per share, a year earlier.
BRIGHT SECOND QUARTER
Shares of Yingli Green and Trina Solar shot up on the New
York Stock Exchange on Thursday morning on the companies'
stronger-than-expected estimates for the second quarter.
Yingli Green's stock was up 10 percent at $4.02, Trina Solar
shares were up 5.5 percent at $6.96.
Yingli Green estimated that its panel shipments increased
23-24 percent in the second quarter from the first. It had
previously forecast a low-to-mid teen percentage increase.
Trina Solar estimated that it has shipped between 630 MW and
660 MW of solar panels in the quarter ended June, higher than
its forecast of 500 MW-530 MW.
Both companies said gross margins were likely to be 11-12
percent. Trina had earlier forecast gross margins in the
mi-single digits in percentage terms, while Yingli was expecting
margins of 9 percent to 11 percent.
Trina Solar is scheduled to report second-quarter results on
Aug. 20, while Yingli Green will report on Aug. 30.