SUNPOWER Group, which provides energy-saving and clean power solutions, expects net profit for the third quarter ended Sep 30, 2021, without the financial effects of convertible bonds, to be negatively impacted.

 

This comes amid a rise in commodity prices which has pushed up feedstock costs of the company, leading to cost pressures on the production operations of its green investment projects.

 

Moreover, a power rationing in China since September 2021 has resulted in downstream customers temporarily reducing their steam consumption due to operational constraints.

 

The profit guidance, issued on Wednesday (Oct 27) night, is based on a holistic assessment of factors that may affect near-term earnings prospects and a review to date of the group' s unaudited consolidated financial results for the third quarter and nine months ended Sep 30.

 

Despite expectations of Q3 net profit being negatively impacted, the group said steam sales volume in the third quarter still saw a notable year-on-year increase due to strong demand from customers and the ramp-up of existing green investment projects - including the Shantou project.

 

The group also estimates profit attributable to equity holders generated by its green investment businesses for the nine months ended Sep 30, to record a year-on-year increase, without the financial effects of convertible bonds.

 

" The surge in feedstock price is exceptional and the group has taken various measures that position it well to navigate the current headwinds and achieve long-term sustainable development," Sunpower said.

 

The group added that it has been raising steam prices with customers and controlling unit material consumption. It is also stocking up feedstock when prices are conducive, pursuing cost savings through blended combustion of sludge and other wastes and by increasing efficiency, as well as adding new customers.

 

It expects the tight energy supply to be temporary in the longer term. As relevant measures introduced by the central government gradually take effect, the group estimates the tight energy supply to be progressively alleviated.

 

The group' s financial results for the third quarter and nine months ended Sep 30 will be released in November 2021.