Canadian Solar, a global leader in solar energy solutions, has announced its financial results for the second quarter of 2023, showcasing significant growth despite challenges in the market.
In the second quarter, the company reported a remarkable 39 percent increase in revenues compared to the previous quarter, reaching $2.4 billion. This growth was driven by a 62 percent year-over-year surge in total module shipments recognized as revenues, amounting to 8.2 GW. The company’s success was attributed to higher solar module shipment volumes and increased project sales. However, these achievements were partly offset by a decline in module average selling prices.
Gross profit for Q2 2023 was reported at $441 million, marking a 39 percent quarter-over-quarter increase and a 19 percent year-over-year increase. Despite these gains, the gross margin for the quarter slightly declined to 18.6 percent compared to the previous quarter. This decline was primarily attributed to the adverse impact of declining module average selling prices and a $31 million inventory write-down, both influenced by the sharp decrease in silicon material prices. These factors were mitigated by lower manufacturing costs and higher margins from project sales.
Total operating expenses for the second quarter were reported at $216 million, a moderate increase from the previous quarter. The quarter’s operating expenses included a $36 million share-based compensation expense related to the CSI Solar IPO. Importantly, the increase in operating expenses remained lower than the rate of revenue growth, reflecting the company’s operating leverage and reduced unit logistics costs.
Canadian Solar’s net income for Q2 2023 was a notable $170 million, or $2.39 per diluted share. This represented a substantial improvement from the previous quarter’s net income of $84 million, or $1.19 per diluted share, and the same quarter in the previous year, which reported a net income of $74 million, or $1.07 per diluted share.
Shawn Qu, Chairman and CEO of Canadian Solar, expressed satisfaction with the company’s strong performance during the quarter. Qu highlighted the record net income achieved in the quarter and the successful completion of the CSI Solar subsidiary’s IPO, which raised around $975 million in gross proceeds. These funds are expected to support the company’s ambitious growth plans in the solar and battery energy storage sectors.
Canadian Solar operates through two business segments, Recurrent Energy and CSI Solar. The Recurrent Energy segment maintains a leading position with a global solar development pipeline of approximately 25 GWp, in addition to an energy storage development pipeline of over 52 GWh. Ismael Guerrero, CEO of Recurrent Energy, emphasized the significant revenue and profit growth achieved during the quarter, driven by project sales such as the flagship 100 MWp Azuma Kofuji project in Japan.
CSI Solar, on the other hand, shipped an impressive 8.2 GW of solar modules to over 70 countries during the quarter. Notably, the top five markets for these shipments were China, Brazil, the U.S., Spain, and Germany. The company’s utility-scale battery energy storage subsidiary, e-STORAGE, boasted a total project turnkey pipeline of 26 GWh, with additional operating battery storage projects contracted under long-term service agreements.
Despite market price declines, Yan Zhuang, President of CSI Solar, expressed satisfaction with the company’s second-quarter results. Zhuang acknowledged the impact of raw material cost declines on the company’s gross margin and the inventory write-down but remained optimistic about the future outlook.
Canadian Solar’s impressive performance in the face of market challenges demonstrates the company’s resilience and strategic positioning within the renewable energy sector.