What happened
Sungrow, a global clean energy technology company, reported a challenging first half of 2026. Revenue fell to 30.912 billion yuan, a decrease of 28.99% year-over-year, while net profit attributable to shareholders dropped 32.01% to 5.259 billion yuan. Gross margin improved slightly to 35.92%, up 1.56 percentage points, which the company attributed to an optimized product mix.
The revenue decline was mainly driven by sharp drops in domestic and Middle East markets. Domestic revenue fell from 18.1 billion yuan to 8.2 billion yuan, down 55%, due to lower PV installations and a strategic decision to abandon loss-making projects. Middle East revenue plunged 91% to 1.1 billion yuan from 5.7 billion yuan a year earlier, as a large Saudi project had been delivered in the prior-year period.
By segment, new energy investment development revenue fell 85.02% to 1.258 billion yuan, and PV power station generation revenue declined 61.05% to 296 million yuan. Inverter and power electronics revenue dropped 19.17% to 12.388 billion yuan, while storage system revenue, which accounted for half of total revenue, fell 13.18% to 15.456 billion yuan.
Why it matters
The results show that Sungrow's heavy reliance on domestic and Middle East markets has become a vulnerability. The domestic PV market contracted sharply, with installations falling from 212 GW to 72 GW in the first half, and the company is also grappling with larger market-based pricing challenges following China's No. 136 policy for new energy projects. This adds pressure to an already weakened revenue base.
Currency fluctuations are another significant risk. Since overseas sales are settled mainly in USD, euros, and Australian dollars, the depreciation of those currencies against the yuan caused a 239.94% jump in financial expenses due to exchange losses. This directly erodes profitability and adds volatility to future earnings.
Sungrow's management is responding by adjusting its geographic strategy. In the US, where new FCC rules and a presidential executive order on power equipment create uncertainty, the company plans to gradually shrink its business and shift focus to other regions and channel sales. It also rules out local manufacturing for now, citing unfair competition and a lack of cost advantages.
Key facts
Sungrow's H1 2026 revenue was 30.912 billion yuan, down 28.99% year-over-year, and net profit was 5.259 billion yuan, down 32.01%.
Domestic revenue fell 55% to 8.2 billion yuan, and Middle East revenue plunged 91% to 1.1 billion yuan.
Inverter shipments dropped to 66 GW from 76 GW, with domestic installations falling from 212 GW to 72 GW.
Accounts receivable stood at 20.899 billion yuan at the end of June, still elevated despite a slight decrease from the start of the year.
What to watch next
How Sungrow adapts to the domestic market's shift toward market-based electricity pricing and its ability to win projects under the new bidding rules will be a key determinant of its recovery.
The company's plan to rebalance its geographic exposure—expanding in other overseas markets and developing channel business while shrinking US operations—will be worth monitoring for execution and margin impact.
With a large accounts receivable base and project-heavy business, investors should watch cash flow trends and any measures the company takes to mitigate currency risks and collection delays.