The leading solar glass manufacturer Flat Glass Group Co.,Ltd. (601865.SH) has reported its weakest financial performance since its 2019 listing, with the company swinging to a net loss in the first half of the year. Financial data reveals that the firm generated RMB 6.668 billion in operating revenue during the January-to-June period, marking a 13.81% year-on-year decline, while its net profit attributable to shareholders came in at negative RMB 363 million, a dramatic 239.04% drop from the RMB 261 million profit recorded in the same period last year.
A closer look at the quarterly figures shows the losses were concentrated in the second quarter. The company managed to post a modest profit of RMB 38 million in the first three months of the year, but the business environment deteriorated sharply in the April-to-June period, dragging the firm into the red. Company representatives attributed the downturn to multiple headwinds, including a struggling solar sector, shifting downstream demand, overcapacity in the photovoltaic glass industry, and the impact of furnace cold repairs.
Prices hit five-year lows
Flat Glass is recognized as a leading domestic glass manufacturer, primarily engaged in the research, development, production, and sale of photovoltaic glass, float glass, architectural glass, and household glass, along with the mining and sale of quartz for glass production. Photovoltaic glass remains the company's core product, contributing 91.42%, 90.01%, and 89.85% of total revenue in 2023, 2024, and 2025 respectively, with the figure standing at 87.90% for the first half of 2026. Although this share has declined slightly, the firm's revenue still relies heavily on a single product category, exposing it to considerable operational risk.
According to SMM data, photovoltaic glass prices followed a pattern of "slow decline in the first quarter, accelerated bottoming in the second, and low-level consolidation in June" during the first half of 2026, with all specifications falling to their lowest levels in five years. The price of 2.0mm single-coated glass started the year at RMB 10.5 per square meter but had fallen to as low as RMB 8.0 per square meter by the end of June, a drop of 23.8%, translating to losses of around RMB 2 per square meter. As a sector bellwether, the sustained weakness in core product prices has dealt a heavy blow to Flat Glass's earnings, with its gross margin tumbling from 16.91% in 2025 to 8.18% in the first half of 2026, while its net margin slipped into negative territory at -5.44%.
Industry insiders point to a combination of oversupply and high inventories prompting companies to offload stock at reduced prices to free up cash, while downstream module makers, facing thin margins, have been aggressively passing cost pressures upstream and driving hard bargains on pricing. On the supply side, total domestic daily melting capacity remained elevated in the first half of 2026. At the start of the year, industry-wide operating capacity stood at 86,210 tons per day, with leading firms firing up new furnaces while some second- and third-tier production lines that had come online earlier began ramping up output, steadily increasing domestic supply. However, due to the high costs and operational challenges of stopping and restarting furnaces, companies initially opted to reduce output by plugging furnace openings rather than undertaking cold repairs. After the export tax rebate was abolished, module manufacturers slashed their production schedules significantly, leading to a sharp contraction in glass procurement. The oversupply became severe, prompting companies to cut production, with domestic operating capacity dropping to 78,685 tons per day by June.
On the demand front, grid integration constraints and declining returns from competitive bidding in 2026 led to widespread delays in power plant projects. New installed capacity in the domestic market fell noticeably year-on-year in the first half, with full-year expectations trimmed to around 210GW. Average monthly module production dropped to roughly 35GW during the period, and module makers prioritized consuming their own glass inventories. Long-term procurement orders shrank dramatically, with sporadic spot purchases for essential needs becoming the market norm and buyers consistently pushing for lower prices.
Just last year, major photovoltaic glass producers such as Flat Glass, CSG Holding, and Kibing Group were still generating profits. But by the first half of 2026, the sector had undergone a deep cyclical adjustment, with the entire industry falling into losses. Among the casualties, Kinetic Technology reported a net loss attributable to shareholders of RMB 313 million, down 225.6% year-on-year, while Ancai Hi-Tech posted a loss of RMB 328 million.
Interest-bearing debt tops RMB 10 billion
The 2026 interim report shows that Flat Glass's short-term borrowings stood at RMB 1.56 billion, up 87.42% from the end of last year, with long-term borrowings of RMB 5.102 billion, non-current liabilities due within one year of RMB 2.847 billion, and bonds payable of RMB 4.137 billion. Total interest-bearing debt approaches the RMB 10 billion mark, while the company's on-book cash and equivalents amount to RMB 3.787 billion. Although the firm maintains a certain level of cash reserves, they are insufficient to cover its loan obligations, and its ability to generate profits has weakened considerably, with operating cash flow deteriorating. As of the end of June, Flat Glass's accounts receivable stood at RMB 2.969 billion, representing 7.15% of total assets. While current receivables collection remains normal, the financial strain on downstream module makers raises the potential risk of bad debts if customer cash flows worsen.
Photovoltaic glass is a typical capital-intensive industry, with furnaces representing substantial fixed assets. During a sector downturn, companies must impair fixed assets when production lines undergo cold repairs or performance deteriorates, and inventories require write-downs as product prices fall, significantly eroding profits at the cycle's trough. In the first half of 2026, Flat Glass recorded asset impairment losses of RMB 201 million, compared with RMB 254 million in the same period last year, which the company attributed primarily to production line shutdowns resulting from the supply-demand imbalance in the glass market.
Notably, the cost curve gap between second- and third-tier manufacturers and leading players has narrowed, weakening the cost advantages of industry leaders. In discussions with Ancai Hi-Tech, company personnel revealed that they currently operate three furnaces with capacities of 800t/d, 900t/d, and 1200t/d, with the 1200t/d unit being the industry standard. While the sector trend is "shutting small furnaces and building larger ones," even some 1200t/d furnaces have been idled this year, underscoring that the core issue remains excessive supply.
In August, photovoltaic glass prices began to recover. "Entering the third quarter, prices have started on a path of bottoming out and recovery. This price correction is not driven by demand improvement but by the effective implementation of joint production cuts by industry players. As market prices continued to fall, with most producers selling below cost, sustained losses have intensified industry-wide output reductions," said Zheng Tianhong, a photovoltaic analyst at SMM. He added that at the end of August, domestic companies held a joint meeting to further solidify production cut plans, and starting this week, more than 6,000 tons per day of furnace capacity is expected to be reduced, significantly alleviating domestic supply pressure. Supported by supply contraction, glass prices have strong rebound potential, with the second-half price center expected to move back toward producers' full cost levels.
In its 2026 semi-annual report, Flat Glass noted that the supply-demand landscape for photovoltaic glass is improving. The company believes that in response to persistently low market prices, the number of cold-repaired production lines in the industry has increased significantly, and the pace of capacity exits is accelerating. Many high-cost, technologically outdated furnaces have entered cold repair or permanent shutdown, leading to a notable contraction in supply. The current phase represents a critical window for capacity clearing, and the exit of inefficient capacity lays the groundwork for improved industry supply-demand dynamics.