www.suntech-power.com
Suntech Power (NYSE: STP) is the world's leading solar energy company as measured by production output of crystalline silicon solar modules. Suntech designs, develops, manufactures, and markets premium quality, high-output, cost-effective and environmentally friendly solar products for electric power applications in the residential, commercial, industrial, and public utility sectors.
Suntech Power posts rebound in revenues and higher production capacity despite tough breaks for solar market
After taking a beating in its share price in recent months due to concern for the solar market amidst European government cuts, Suntech Power (NYSE:STP), the world's largest manufacturer of crystalline silicon solar panels, reported total net revenues of US$625 million for the second quarter - representing a near 95% increase year-over-year.
The news is not one-sided, however, as the company`s gross margins continue to suffer, decreasing from 19.5% in the first quarter to 18.2% in the second quarter.
The sequential gross margin change was primarily due to a lower average sales price as a result of the depreciation of the Euro versus the U.S. Dollar, it said.
Nevertheless, Suntech is fighting to maintain its status as one of the largest players in the industry. The company achieved 1.4GW of PV cell and module production capacity at the end of the second quarter and increased its 2010 annual shipment target from 1.3GW to 1.5GW, which represents over 113% year-over-year shipment growth. Total PV shipments increased 11.9% sequentially and 181.7% from the same period last year.
Suntech swung a loss in the second quarter a result of the company`s plans to restructure operations at its Shanghai facility to focus on the manufacture of crystalline silicon PV cells, which led it to cease the trial production of amorphous silicon thin film solar panels in the second quarter.
Net loss attributable to holders of ordinary shares was $174.9 million, or $0.97 per diluted American Depositary Share (ADS), compared to net income of $20.7 million, or $0.11 per diluted ADS, for Q1 2010.
"Despite successful sales expansion and strong execution during the second quarter, our financial results bear the significant impact of our Shanghai facility restructuring and Shunda Holdings investment impairments. These were necessary adjustments to make, and they have no impact on our core manufacturing operations. Now that they are behind us, we are in a better position to address the growth we are expecting in our core business," said chairman and CEO Dr. Zhengrong Shi.
Indeed, the company has made progress in its growth. During the quarter, Suntech was selected to supply 34.5MW of solar panels for the first phase of the largest solar power plant in Thailand and Southeast Asia. Owned and operated by Bangchak Petroleum and integrated by Solartron Public, the solar plant will be 44MW once completed.
The company also signed agreements to supply Azure Power, India`s major solar power producer, with several megawatts of solar panels to develop utility-scale solar projects across several states in India in 2010 and 2011.
Suntech also continued to expand its North American dealer network to nearly 400 in the second quarter, as it broadened its market share to prepare for US-based manufacturing due to commence in the fourth quarter, it said.
Despite Germany and France (two of Suntech`s largest markets) cutting subsidies in the solar sector, overall demand for solar power remains. President Barack Obama also announced last month that the US would kick-start the solar industry with a $2 billion investment in two solar companies.
Suntech remains confident in the demand for solar energy, as it has decided to accelerate its next phase of capacity expansion and now its target is to achieve 1.8GW of PV cell and module production capacity by the end of this year, enabling it to increase it shipment target. The company also recently opened an office in Grenoble, France - one of its top three markets.
In the third quarter of 2010, the company expects shipments to increase by 15% to 20% sequentially, while consolidated gross margin in Q3 is expected to be in the mid to high teens.
Due to the capacity expansion, Suntech expects capital expenditures of approximately $300 to $350 million in 2010, compared to $200 million previously. Cash and cash equivalents totaled $765.6 million as of June 30, 2010, compared with $677.2 million as of March 31, 2010.
The company`s share price started the year off around $18.5 and is currently trading at $9.03, up 0.45% today.
Suntech Power produces solar products for residential, commercial, industrial, and utility applications.
