Canadian Solar back in the black

Canadian Solar all but wrote off the European PV market in the third quarter, as strong module sales in Asia and the Americas and the ongoing success of its downstream projects business launched the company back into profitability.

Canadian Solar, which performs most of its manufacturing in China, reported a net income of $27.7m for the third quarter – coming off losses of $12.6m in the second quarter, and $43.7m in third-quarter 2012.

Canadian Solar follows JinkoSolar, which became the first major Chinese manufacturer to return to profitability during the second quarter of this year. Canadian Solar anticipates being profitable for the whole of 2013.

Yesterday Hanwha SolarOne, a smaller Chinese rival, reported another loss for the third quarter.

Just 9.5% of Canadian Solar’s revenues came from Europe during the third quarter, compared to 47.9% during the same period last year, in a shift underscoring the dramatic changes taking place across the global PV industry.

Meanwhile, the Americas region and Asia accounted for 46.9% and 43.6% of quarterly revenues, respectively.

Canadian Solar expects “limited demand” for its modules in Europe in the near future.

In addition to higher gross margins at its modules business – which shipped 478MW during the quarter – Canadian Solar owes its strong performance to the success of its downstream projects division, which is soaking up an increasing amount of the company’s module output.

The high-margin “total solutions” division, which includes project sales and EPC work, accounted for 41.4% of Canadian Solar’s $490.9m of quarterly revenues, compared to 12.8% during the same quarter last year.

Canadian Solar finalised the sale of two PV arrays in Ontario valued at more than C$95m ($91m) to TransCanada during the quarter, while increasing its late-stage project pipeline to more than 1GW across Canada, Japan, the US and China.

Meanwhile, the company recently began EPC work at a 130MW PV project owned by Samsung in Ontario, which will generate C$310m in revenue for Canadian Solar.

Most major Chinese PV module makers have ventured into project development and EPC work over the past few years, but none more successfully than Canadian Solar, whose North America ties give it better access to the higher-margin markets of Canada and the US.

“We have high confidence in our visibility and in the sustainability of our business plan into the next several years,” says chief executive Shawn Qu.

Canadian Solar is among the best performing PV stocks in a year marked by a number of incredible rallies, with shares in the Ontario-headquartered company up more than seven-fold in 2013.

The company expects to ship 1.75GW-1.77GW of modules this year.

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