Canadian Solar is confident that it can recover from a minor setback of declining net revenues from $336.9 million in the first quarter to $328.7 million in the second quarter of its 2010 fiscal year ending on June 30.
Shipments also fell sequentially, from 185 megawatts to 181.2 MW in the second quarter.
In spite of the lower figures, Canadian Solar said its net income doubled from $1.5 million, or $0.03 per diluted share, to $3.2 million, or $0.07 per diluted share. Most of its sales came from Europe.
“This quarter’s results included a $9 million net foreign exchange charge, which is slightly less than predicted. Currency hedging reduced the impact of foreign exchange losses by $21.6 million,” said Arthur Chien, chief finance officer of Canadian Solar.
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The company revealed in its first quarter financial report that it hedged about 90 percent of its cash flow for the 2010 fiscal year and anticipated a foreign exchange loss of approximately $10 million to $12 million.
“Demand and pricing continued to be strong for the quarter, a situation we expect to continue throughout 2010,” said Shawn Qu, chairman and chief executive of Canadian Solar.
Gross margin rose from 12.4 percent to 13.6 percent due to reduced third-party solar cells purchased by the company. Instead, Canadian Solar manufactured 110 MW of the solar cells internally and purchased the balance.
“We expect to increase our internal quarterly cell output to 127 MW by the third quarter and 180 MW by the fourth quarter,” said Mr. Qu.
The company also plans to increase its market share and pricing power by establishing its brand reputation for technology innovation and excellence. Canadian Solar has begun shipping new products since March, including its enhanced selective emitted modules, which substantially increase solar modules’ unit power, and New Edge solar modules, which allow for quick and cheaper rooftop solar installations.
For the third quarter, Canadian Solar expects to deliver 190 MW to 200 MW of solar modules and increase its gross margin to 14.5 percent up to 15.5 percent. The company intends to boost its annual internal cell manufacturing capacity to 800 MW by the next quarter.
As for the rest of the year, Canadian Solar said it can ship out 700 MW to 800 MW. The company also plans to finish its third cell building by early 2011 and lift total internal cell production capacity to 1.3 gigawatts, of which 620 MW will have higher conversion efficiency cell capacity.
