UPDATE 2-Weak prices to hit Canadian Solar margin
Mon Oct 17, 2011 9:13am EDT
* Gross margin seen at 2-5 pct vs prior 9-12 pct
* Reaffirms Q3 shipments forecast
* Shares fall 7 pct before the bell
Oct 17 (Reuters) - Canadian Solar Inc cut its third-quarter gross margin forecast due to weak average selling prices (ASPs), but the solar panel maker kept its shipments outlook, saying strength in customer demand returned at the end of the quarter.
Canadian Solar shares, which have lost about 70 percent of their value this year, were down 7 percent at $3.51 before the bell on Monday. The stock closed at $3.79 on Friday on Nasdaq.
Solar panel prices have fallen by about 40 percent this year due to a glut resulting from government subsidy cuts in top-2 markets Germany and Italy, coupled with rising production mainly in China.
"Demand was initially lower earlier in the third quarter as customers appear to have been waiting as long as possible before committing to purchases given continued pressure on ASPs throughout the solar supply chain," Canadian Solar said in a statement.
The Ontario, Canada-based company, which has the majority of its operations in China, expects gross margins of 2 percent to 5 percent in the third quarter, compared with its previous outlook of 9 percent to 12 percent.
The company kept its shipments forecast at 350 megawatts (MW) to 360 MW.
Wunderlich Securities analyst Theodore O'Neill on Monday raised his 2012 solar demand forecast to 23.25 gigawatt (GW) from 22.6 GW earlier, saying demand will be spurred by cheaper panels.
"U.S., China. Germany goes back to growth from negative territory. U.S. and Chinese growth is off a small base," O'Neill wrote in a note to clients.
Solar analysts have pointed out the young industry is now weeding out the weaker companies, and that prices for solar power are quickly approaching parity with electricity generated by fossil fuels, which is crucial for reducing its need for government subsidies. |
