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Revenue Falls For Canadian Solar In Q1 2012 But Beats Profits Expectations

May 10, 2012

After four straight quarters of increases in revenue, Canadian Solar (CSIQ :NASDAQ) has finally come back to earth in Q1 2012 with a 26.5 percent decrease in revenue from the same quarter in the previous year but the reported loss that was better than expected.

Canadian Solar’s net revenue for Q1 2012 was $325.8 million, a 26.5 percent drop from the $443.4 million reported in the same quarter of the previous year. The decrease in revenue could have been worse but the shipments for the quarter were 343 megawatts (MW), a 40 percent increase from the 244 MW shipped in Q1 2011.

Sales to North America were 45.1 percent of total sales while Europe represented 42.6 percent of total sales for the quarter.

Analysts were expecting a loss of $0.52 per share but Canadian Solar managed to beat those expectations by delivering a loss of $21.3 million or $0.49 per share.

The solar industry has become a survival of the fittest. To make sure it is around for the long term, Canadian Solar is going to follow in the footsteps of larger rivals First Solar (FSLR :NASDAQ) and LDK Solar (LDK :NYSE) and reduce its workforce to improve its margins.

Canadian Solar offered guidance of 8 – 10 percent for gross margins, an improvement from the 7.7 percent delivered in Q1 2012. Shipments are also expected to rise to a range of 430 – 450 MW.

If Canadian Solar is going to continue to improve its margins, it will be necessary for the company to stick to its guidance of improving its manufacturing costs to $0.50 – $0.60 per watt versus the $0.85 per watt in Q4 2011.

Shares of Canadian Solar were up 4.36 percent in afternoon trading.

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