SolarEdge navigates Vietnam manufacturing facility shutdown to post record solar earnings in Q3 2021

Nov 3, 2021 05:23 PM ET
  • Inverter manufacturer SolarEdge posted record revenues from its solar department in Q3 2021 in spite of a COVID-related closure at its production facility in Vietnam influencing its capacity to meet need.
SolarEdge navigates Vietnam manufacturing facility shutdown to post record solar earnings in Q3 2021
Image: SolarEdge

SolarEdge validated complete revenues for Q3 2021 of US$ 526.4 million, up 10% sequentially and also a 56% boost on its overall earnings figure in Q3 2020, while additionally representative of a brand-new quarterly profits record for the company. Solar-related profits additionally rose to a brand-new record, up 11% sequentially as well as 55% year-on-year to US$ 476.8 million-- towards the leading end of its advice through.

While the gross margin of its solar department slipped somewhat on Q2 2021 to 36.6%, SolarEdge noted it delivered 1.9 GWac of solar inverters during the reporting duration in spite of turbulence in its supply chain caused by a shutdown at its Vietnam manufacturing facility, which produced 20-- 25% of its complete inverter outcome.

SolarEdge originally revealed in August that its Vietnam center had actually been ordered to shutter as a result of COVID-related lockdowns in the nation, nevertheless the closure continued for far longer than initially anticipated, going on to last some 12 weeks. The factory at some point reopened last month and also is now expected to ramp back up to full capability by mid-November, nonetheless the closure has developed a space in the supply of inverter items for Q4 that will take some time to replenish, and also at a higher expense incurred as a result of an escalation of supply chain headwinds, president Zvi Lando said

Preparations for inverters are presently in between 12-- 14 weeks, Lando kept in mind.

The closure of its facility in Vietnam prompted SolarEdge to reallocate manufacturing ability to various other areas, most significantly China. Lando said the company sustained further costs in delivery components from Vietnam to China, and the resulting change in making capability to China resulted in a greater proportion of SolarEdge's products stemming from jurisdictions where it incurred import tolls. Throughout the quarter, some 47% of SolarEdge's items were shipped from countries based on import tariffs-- specifically China-- in contrast to simply 12% in Q2.

Lando additionally included that the disturbance brought on by the Vietnam center closure had actually motivated the company to accelerate plans for a growth of its production ability in Mexico. That brand-new facility is expected to deliver its initial inverters in H1 2022, and Lando exposed on a teleconference with experts that it's SolarEdge's intent that the Mexico center caters for the bulk, otherwise all, of need from the United States solar market.

The influences of the Vietnam factory closure are to last throughout Q4, with SolarEdge issuing assistance that its gross margin for its solar division will certainly be up to between 31-- 34%. Lando emphasized this tightening up of margins would be short-term, and also informed analysts throughout a teleconference yesterday that the company had thus far stood up to price rises to recover its margin.

As supply chain volatility has risen, many solar element providers have actually enhanced costs in current quarters. PV component rates are estimated to have risen by upwards of 25% this year, while last week microinverter distributor Enphase Power stated it was preparing an additional price surge for later on this month-- its third this year-- to show greater input prices.

Despite the effect of supply chain headwinds on the solar sector around the world, SolarEdge provided healthy support for Q4, forecasting solar revenues within a series of US$ 490-- 515 million. Lando emphasized that it had already obtained orders for around 4GWac of inverters to be provided in Q4 2021 and Q1 2022, with further orders still to come in.

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