In China, a Mixed Bag of Results And News from Solar Majors in Q1

Close on the heels of a strong recovery in March this year, right after the worst of the Covid-19 imposed lockdowns in the country, major China-based firms have declared a mixed set of  news, guidance, and results.

Bringing up the tough news was Sunpower, a manufacturer of cells and modules, which has idled its plants outside China. The firm has also moved an unspecified number of employees to a 4 day week, even as its executive team has taken a second haircut on total salaries.

Another major, GCL System Integration Technology (GCL-SI),  has guided for continued quarterly losses in Q1 2020, due to the COVID-19 related issues impacting its business operations in the reporting period.

Longi solar, one of the more globalised firms in China, has surprised some observers with a positive guidance, saying that preliminary calculations put net profit attributable to shareholders in the range of US$233.25 million to US$275.67 million, compared to US$86.41 million recorded in Q1 2019.

The predicted spike in net profit has been attributed to the expansion of production capacity, with higher uptake in demand for large-size mono wafers, while capacity and demand increased for its high-efficiency PV modules. The firm also claimed that its efforts to mitigate the impact of Coronavirus on its manufacturing plants and employees have been a success.

Meanwhile, Jiangsu Zhongli Group, which also includes integrated PV manufacturer Talesun, has guided a net loss for the first quarter of 2020 due to COVID-19’s impact on operations. However the firm is going ahead with a plan to raise around US$222 million in a non-public offering to build an 1GW integrated heterojunction (HJT) plant.

Even Jolywood Sunwatt Co, a  PV backsheet and high-efficiency PV manufacturer has guided for a small loss in the first quarter of 2020 due to the impact of COVID-19 on its materials and solar module manufacturing operations. This compares to a profitable Q1 for it in the corresponding quarter last year.

The mixed news above is a good sample of the situation in China, where manufacturers had announced very ambitious expansion plans, even before  the full extent of the Covid-19 pandemic was evident, especially outside China. At the moment, it seems fair to say that those plans might offer a similar picture of mixed outcomes, as the full impact of Covid-19 rolls out.

Firms with a higher share of overseas sales are likely to show the full impact of the pandemic in Q2 possibly , as the disruptions at home in Q1 and the halt in key markets globally takes toll there.