press

Press Releases

<< Back
Suntech Reports First Quarter 2010 Financial Results

SAN FRANCISCO and WUXI, China, June 3, 2010 /PRNewswire via COMTEX/ --Suntech Power Holdings Co., Ltd. (NYSE: STP), the world's largest crystalline silicon photovoltaic (PV) module manufacturer, today announced financial results for its first fiscal quarter ended March 31, 2010.



    First Quarter 2010 Highlights

    -- Total net revenues were $588.0 million in the first quarter of 2010,
       representing 0.8% growth sequentially and 86.3% year-over-year

    -- Total PV shipments increased 11% sequentially and 182% year-over-year

    -- Gross profit margin for the core wafer to module business was 22.1% in
       the first quarter of 2010

    -- Consolidated gross profit margin was 19.5% in the first quarter of 2010

    -- Net income attributable to holders of ordinary shares was $20.7 million,
       or $0.11 per diluted American Depository Share (ADS). Each ADS
       represents one ordinary share

    -- Suntech increases 2010 annual shipment target from 1.25GW to 1.3GW,
       which represents an 85% increase above 2009 total shipments

    -- Suntech achieved 1.2GW of PV cell and module production capacity at the
       end of the first quarter of 2010




"We are pleased to announce 11% sequential growth in shipments for the first quarter of 2010," said Dr. Zhengrong Shi, Suntech's Chairman and CEO. "To meet strong global demand for Suntech's premium solar products, which we expect will continue through the rest of 2010, we maximized the utilization of our facilities and added an incremental 100MW of PV cell and module capacity during the quarter. We also maintained our focus on enhancing our regional service teams to support our growth.

"We are pleased about the solar growth trends that we are seeing across all geographies. Europe's commitment to achieving 20% renewable energy generation by 2020 is proving to be the foundation for long-term stable growth. Our North American dealer network and utility initiatives should enable us to triple our sales to that region in 2010. And, we are continuing to build our presence in emerging markets. In fact, Asia, Africa and the Middle East represented close to 21% of our sales in the first quarter, and we continued to diversify our geographic sales mix globally. Clear customer recognition of Suntech's superior track record and highly bankable products is a key driver of our demand in all of these markets.

"As the leading producer of crystalline silicon solar panels, we are proud to have reached another important milestone with the shipment of our 10 millionth solar panel during the first quarter. To date, the cumulative solar energy generated from Suntech panels alone is enough to provide clean and renewable power for around one million households. This is only the beginning for Suntech and for widespread solar adoption. Suntech remains strongly committed to investing in the technology, capacity and global service platform that will offer even greater access to nature's most abundant energy resource."



    Recent Business Highlights

    Markets
    -- The 10 millionth solar panel produced by Suntech was delivered during
       the first quarter of 2010. Since inception, Suntech has delivered over
       2.2GW of solar products to over 1,400 customers in more than 80
       countries. Cumulatively these panels generate enough power for around
       1,000,000 households.

    -- The Finnow Tower 24.5MW project was recently connected to the grid on a
       former military airbase in Germany by Solarhybrid using 90,000 Suntech
       270 watt modules. This is one of the five largest PV projects in
       Germany.

    -- Suntech received official certification under the UK Microgeneration
       Certification Scheme (MCS) for its most popular models, a pre-requisite
       for selling solar panels in the UK market. The certification will
       enable customers and value-added resellers in the UK to utilize
       Suntech's solar panels for reliable electricity generation.

    -- According to data published by the California Solar Initiative, Suntech
       has consistently increased market share in California's solar market
       from 5% in 2008, to 13% in 2009 and 18% so far in 2010. California's
       market accounted for approximately 45% of solar sales in North America
       in 2009.

    Capacity Expansion
    -- Suntech has decided to delay expansion of thin film manufacturing
       capacity in Shanghai and has designated the Shanghai manufacturing
       facility as a new site for expansion of Suntech's high performance
       crystalline silicon PV cell and module manufacturing capacity. Suntech
       plans to add 1GW of manufacturing capacity in Shanghai within the next
       three years.

    Technology
    -- Suntech's high performance Pluto technology is currently achieving an
       average of over 19% conversion efficiency on mono-crystalline PV cells.
       Suntech is currently producing and shipping approximately 4MW of IEC
       certified Pluto modules per month.

    -- The Victoria-Suntech Advanced Solar Facility was recently launched in
       collaboration with the Swinburne University of Technology. The facility
       has been partially funded by an AUD3 million grant under the Victorian
       Science Agenda Investment Fund and will provide a platform to develop
       super high efficiency solar cells based on nanoplasmonic technology.

    -- Suntech initiated a research project with the University of New South
       Wales and Silex Solar to improve conversion efficiency of crystalline
       silicon solar cells. The three-year collaborative research project was
       awarded an AUD5 million grant from the Australian Solar Institute.

    Convertible Notes
    -- In the first quarter of 2010, Suntech repurchased an aggregate of
       $221.2 million principal amount of its 0.25% Convertible Senior Notes
       due 2012 for a total consideration of $221.2 million.



First Quarter 2010 Results

Total net revenues for the first quarter of 2010 were $588.0 million, a slight increase of 0.8% from $583.6 million in the fourth quarter of 2009 and an increase of 86.3% from $315.7 million in the first quarter of 2009.

For the first quarter of 2010, consolidated gross profit was $114.5 million and gross margin was 19.5% compared to consolidated gross profit of $138.7 million and gross margin of 23.8% in the fourth quarter of 2009. The sequential gross margin decline was primarily due to a lower average sales price as a result of the substantial depreciation of the Euro versus the U.S. Dollar.

Operating expenses for the first quarter of 2010 decreased to $51.0 million compared to $51.7 million in the fourth quarter of 2009.

Income from operations was $63.5 million for the first quarter of 2010 compared to $87.0 million in the fourth quarter of 2009.

Net interest expense declined to $22.6 million in the first quarter of 2010 compared to net interest expense of $24.2 million in the fourth quarter of 2009. Net interest expense in the first quarter of 2010 included $8.6 million in non-cash expenses of which $7.3 million was related to the adoption of FASB Codification 470-20-65, Accounting for Convertible Debt Instruments that May be Settled in Cash Upon Conversion. This compares to $12.7 million in non-cash net interest expense in the fourth quarter of 2009. The decrease in interest expenses was primarily due to the repurchase of the significant majority of the outstanding 0.25% Convertible Senior Notes due 2012, which had a put option in February 2010.

Foreign currency exchange loss was $24.5 million in the first quarter of 2010 compared to $13.2 million in the fourth quarter of 2009. The foreign currency loss in the first quarter was primarily related to the substantial depreciation of the Euro versus the US Dollar.

Net other income was $2.8 million in the first quarter of 2010, compared with a net other expense of $3.6 million in the fourth quarter of 2009. The net other income in the first quarter of 2010 was mainly due to gains from hedging activities. Foreign exchange loss net of hedging gains was approximately $21.9 million in the first quarter of 2010.

Net income attributable to holders of ordinary shares was $20.7 million, or $0.11 per diluted ADS for the first quarter of 2010, compared to net income of $44.0 million, or $0.24 per diluted ADS, for the fourth quarter of 2009.

In the first quarter of 2010, the major non-cash related expenses were share-based compensation charges of $3.0 million; $8.6 million of non-cash interest expenses, as mentioned above; and depreciation and amortization expenses of $18.7 million.

In the first quarter of 2010, capital expenditures, which were primarily for the addition of new production equipment, totaled $72.4 million.

Cash and cash equivalents decreased to $677.2 million as of March 31, 2010, from $833.2 million as of December 31, 2009. The decrease in cash and cash equivalents was primarily due to the additional investment made to GSF, repurchase of the 0.25% Convertible Senior Notes due 2012, and sequential increases in restricted cash, accounts receivable and inventory.

Accounts receivable totaled $467.7 million as of March 31, 2010, compared with $384.4 million as of December 31, 2009. The increase was mainly due to a higher shipment level in the last month of the quarter. Days sales outstanding were 72 days in the first quarter of 2010, compared to 60 days in the fourth quarter of 2009.

Accounts receivable due from investee companies of GSF was $104.0 million as of March 31, 2010, compared with $110.2 million as of December 31, 2009. The sequential decrease in the related accounts receivable was due to the depreciation of the Euro versus the USD.

Inventory was $314.1 million as of March 31, 2010, compared with $280.1 million as of December 31, 2009. The increase in inventory was in line with the growth of production and shipments.

Accounts payable totaled $384.3 million as of March 31, 2010, compared with $264.2 million as of December 31, 2009. The increase in accounts payable was primarily due to extended credit terms from suppliers.

Business Outlook

In the second quarter of 2010, Suntech expects single digit percentage growth in shipments sequentially. Consolidated gross margin in the second quarter of 2010 is expected to be in the high teens, which is based on an assumed exchange rate of 1.23USD to the Euro.

Due to strong demand, Suntech has increased its 2010 shipment target from 1.25GW to more than 1.3GW, which is 85% higher than 2009 shipments.

Suntech is on track to expand PV cell production capacity to 1.4GW by the end of the second quarter 2010 of which 450MW will be Pluto-enabled. To achieve 1.4GW capacity, Suntech expects capital expenditures of approximately $200 million.

First Quarter 2010 Conference Call Information

Suntech management will host a conference call today, Thursday, June 3, 2010 at 8:00a.m. U.S. Eastern Time (which corresponds to 8:00p.m.Beijing/Hong Kong time and 12:00p.m. Greenwich Mean Time on June 3, 2010) to discuss the company's results.

To access the conference call, please dial +1-617-597-5392 (for U.S. callers/ international callers) or +852-3002-1672 (for HK callers) and ask to be connected to the Suntech earnings conference call. A live and archived webcast of the conference call will be available on Suntech's website at http://www.suntech-power.com under Investor Center: Financial Events.

A telephonic replay of the conference call will be available until June 13, 2010 by dialing +1-617-801-6888 (passcode: 76039171).

About Suntech

Suntech Power Holdings Co., Ltd. (NYSE: STP) produces industry-leading solar products for residential, commercial, industrial, and utility applications. With regional headquarters in China, Switzerland, and the United States, and gigawatt-scale manufacturing worldwide, Suntech has delivered more than 10,000,000 photovoltaic panels to over 1,400 customers in more than 80 countries. Suntech's pioneering R&D creates customer-centric innovations that are driving solar to grid parity against fossil fuels. Suntech's mission is to provide everyone with reliable access to nature's cleanest and most abundant energy source.

For more information about Suntech's people and products visit http://www.suntech-power.com

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements, and includes the ability to increase PV cell production capacity to 1.4GW by mid-2010; expected Q2 2010 shipments and gross margin; full year 2010 shipment expectations; and 2010 capacity and capital expenditures; the ability of Europe to achieve its renewable energy generation commitment by 2020; expected demand in 2010; the amount of manufacturing capacity to be installed in Shanghai within 3 years; the ability to develop nanoplasmonic solar cell technology; and the ability of the UNSW and Silex Solar project to increase conversion efficiency. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in Suntech's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. Suntech does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.





    Note: The quarterly consolidated income statements are unaudited. The
          condensed consolidated balance sheets are derived from Suntech's
          unaudited consolidated financial statements.



                         SUNTECH POWER HOLDINGS CO., LTD.
                       CONDENSED CONSOLIDATED BALANCE SHEET
                                    (In $'000)

                                                    As of             As of
                                                   Mar 31,           Dec 31,
                                                    2010              2009
    ASSETS
    Current assets:
      Cash and cash equivalents                    677,159           833,158
      Restricted cash                              162,762           124,877
      Inventories                                  314,119           280,054
      Accounts receivable                          467,677           384,416
          -----Investee companies of GSF           103,970           110,231
          -----from others                         363,707           274,185
      Value-added tax recoverable                   58,948            41,219
      Advances to suppliers                         50,195            48,820
      Short-term investments                            --           200,817
      Other current assets                         268,391           242,625
    Total current assets                         1,999,251         2,155,986

    Property, plant and equipment, net             816,558           777,580
    Intangible assets, net                         162,692           166,687
    Goodwill                                        84,209            86,062
    Investments in affiliates                      330,958           251,347
    Long-term prepayments                          187,399           188,085
    Long-term loan to suppliers                     54,340            54,667
    Amount due from related parties                180,515           193,577
    Other non-current assets                       107,378           109,663
    TOTAL ASSETS                                 3,923,300         3,983,654

    LIABILITIES AND EQUITY
    Current liabilities:
       Short-term borrowings, including
        current portion of long-term bank
        borrowings                                 835,541           800,390
       Accounts payable                            384,316           264,235
       Convertible notes-current                     4,218           223,982
       Other current liabilities                   213,263           229,473
    Total current liabilities                    1,437,338         1,518,080

    Long-term bank borrowings                      132,425           138,021
    Convertible notes-non-current                  524,242           516,912
    Accrued warranty costs                          60,116            55,152
    Other long-term liabilities                    138,724           142,730
    Total liabilities                            2,292,845         2,370,895

    Total Suntech Power Holding Co. Ltd.
     Equity                                      1,616,677         1,598,049
    Noncontrolling interest                         13,778            14,710
    Total equity                                 1,630,455         1,612,759

    TOTAL LIABILITIES AND EQUITY                 3,923,300         3,983,654



                        SUNTECH POWER HOLDINGS CO., LTD.
                         CONSOLIDATED INCOME STATEMENT
            (In $'000, except share, per share, and per ADS data)

                                      Three months  Three months  Three months
                                           ended        ended        ended
                                           Mar 31,      Dec 31,      Mar 31,
                                            2009         2009         2010


    Total net revenues                    315,656      583,619      588,034
       - Investee companies of GSF        100,547           --           --
       - Others                           215,109      583,619      588,034
    Total cost of revenues                259,369      444,916      473,491

    Gross profit                           56,287      138,703      114,543

    Selling expenses                       11,401       20,493       19,984
    General and administrative expenses    18,820       18,164       21,477
    Research and development expenses       4,922       13,023        9,561
    Total operating expenses               35,143       51,680       51,022

    Income from operations                 21,144       87,023       63,521

    Interest expense                      -26,743      -25,667      -23,436
    Interest income                         5,098        1,449          851
    Foreign exchange loss                  -6,191      -13,198      -24,542
    Other income (expense), net            12,567       -3,646        2,776

    Income before income taxes              5,875       45,961       19,170
    Tax provision (expense), net               78       -2,643       -3,150

    Net income after taxes before
     noncontrolling interest and equity
     in earnings of affiliates              5,953       43,318       16,020
    Added Equity in (loss) earnings of
     affiliates, net of taxes              -3,874          452        4,622

    Net income                              2,079       43,770       20,642

    Add: Net (loss) income attributable to
     the noncontrolling interest             -292          253           63

    Net Income attributable to ordinary
     shareholders of Suntech Power
     Holdings Co., Ltd.                     1,787       44,023       20,705


    Net income per share and per ADS:
    - Basic                                  0.01         0.25         0.12
    - Diluted                                0.01         0.24         0.11

    Shares and ADSs used in
     computation:
    - Basic                           155,881,265  179,047,395  179,298,622
    - Diluted                         156,794,603  182,322,610  182,268,491

    Each ADS represents one ordinary share


  For further information, please contact:

    In China:
     Rory Macpherson
     Investor Relations Director
     Tel:   +86-21-6288-5574
     Email: rory@suntech-power.com

    In the United States:
     Kristen McNally
     Executive Vice President
     The Piacente Group, Inc. (Investor Relations Counsel, Suntech)
     Tel:   +1-212-481-2050
     Email: suntech@tpg-ir.com



SOURCE Suntech Power Holdings Co., Ltd.