Pacific Sun Technologies
Recent Losses Expose Flaws in Canadian Solar's Expansion Plans
Canadian Solar may be one of the biggest solar manufacturers in the world, but that doesn't guarantee success in a highly competitive industry.
The effects of a sharp decline in solar panel prices are finally being felt by some of the world's largest solar manufacturers, and today it was Canadian Solar's (NASDAQ:CSIQ) turn to report a down quarter. But this quarter may be more notable than those that came before it.
Canadian Solar's shipments in the fourth quarter were 1,612 MW, behind JinkoSolar Holding Company's (NYSE:JKS) 1,733 MW; its gross margin of 13.9% (on an adjusted basis) was also lower than the 14.3% at JinkoSolar. We could see Canadian Solar falling behind another major competitor. And if margins continue to drop, it could be bad for the company's expansion plans over the long term.
IMAGE SOURCE: GETTY IMAGES.
The easy money is gone
Before we dive more into results, I think it's important to note that Canadian Solar is operating in a more normal environment today than it has in the past few years. In late 2014 and early 2015, the company completed a number of very high-margin Canadian projects, leading to a windfall of profits:
CSIQ NET INCOME (TTM) DATA BY YCHARTS.
But the easy-money projects are now gone from financial results, and the company is competing by selling solar panels and developing solar projects, just like everyo