Xinyi Solar boasts doubling of H1 profits but warns over solar glass headwinds

Xinyi Solar said it was implementing new cost controls in light of falling ASPs for solar glass. Image: Xinyi Solar.

Solar glass provider Xinyi Solar has reported a more-than-doubling of profits in H1 2021, but warned that weaker demand and lower prices for solar glass will dampen its results in the second half of the year.

Reporting its first half performance last week, Xinyi Solar revealed that H1 2021 revenue stood at HK$8.074 billion (US$1.037 billion), an increase of more than 74% year-on-year. Net profit meanwhile more than doubled to HK$3.072 billion (US$394.9 million), leading the company to describe its performance in the first half of the year as “spectacular”.

The group’s first half performance was mainly driven by its solar glass manufacturing activities, which accounted for 81% of total group revenue – the remaining 19% originating from utility-scale solar development activities – which was in turn boosted by surging solar glass prices in the first quarter.

Average selling prices (ASPs) for solar glass surged towards the end of last year, prompting solar module manufacturers to describe them as “out of control” and ask the Chinese government to intervene.

ASPs did start to decline throughout the first half however, with Xinyi noting that the price for 3.2mm glass in particular fell by at least 45% in the six-months ended 30 June 2021.

Despite a weakening spot price for solar glass in Q2, Xinyi managed to maintain its gross margin at 51.2%, however this is now expected to fall in the second half of the year as greater quantities of glass output comes onstream and demand for glass remains dimmed as module manufacturers lower utilisation rates amidst pricing volatility elsewhere.

Xinyi noted that around 7,900MT per day of new glass output was added across the industry in the first half of the year, with Xinyi itself adding new capacity to take its daily output capacity to 11,800MT as of 30 June.

The company further noted that in anticipation of weaker pricing moving forward, it had adopted flexible marketing strategies, optimised product portfolios for next generation products such as large-format solar modules and implemented new cost control measures.