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Suntech Reports First Quarter 2011 Financial Results

-- PV shipments increased 63% year-over-year
-- Maintains 2011 shipment guidance of 2.2GW

WUXI, China, May 25, 2011 /PRNewswire via COMTEX/ --

Suntech Power Holdings Co., Ltd. (NYSE: STP), the world's largest producer of solar panels, today announced financial results for its first fiscal quarter ended March 31, 2011.

Highlights

  • Total net revenues were $877.0 million in the first quarter of 2011, representing a sequential decrease of 7.2%, and an increase of 49.1% year-over-year.
  • Total PV shipments decreased 3.1% sequentially, and increased 62.9% year-over-year.
  • Consolidated gross profit margin was 19.0% in the first quarter of 2011, compared to 16.2% in the fourth quarter of 2010 and 19.5% in the first quarter of 2010.
  • Net income attributable to holders of ordinary shares was $31.9 million, or $0.17 per diluted American Depository Share (ADS). Each ADS represents one ordinary share.
  • Suntech achieved 2.2GW of PV cell and module capacity, and 1GW of silicon ingot and wafer capacity as of the end of the first quarter of 2011.
  • Mr. David W. King succeeded Ms. Amy Zhang as Chief Financial Officer in May 2011.

"The first quarter of 2011 was a solid quarter that demonstrated the resilience of Suntech's business model under challenging market conditions," said Dr. Zhengrong Shi, Chairman and CEO. "Despite a slight sequential decline in our shipments related to policy uncertainty in Italy, a long winter in Germany and first quarter seasonality, we improved our gross margin from the fourth quarter and continued to diversify our sales across global markets. These outcomes reflect our ongoing efforts to enhance our competitiveness, mitigate policy risk, and position Suntech to increase our share in high-growth emerging markets. In particular, we were pleased to see greater demand in the Chinese solar market during the first quarter."

"Our recently acquired silicon ingot and wafer facility is now fully integrated and operating smoothly. We expanded annualized wafer production capacity to 1GW and are on track to reach 1.2GW in the second half of 2011. The increasing output of internally produced wafers will drive progressive reduction in wafer costs through 2011. We also continued to expand our cell and module capacity and achieved 2.2GW of capacity by the end of the first quarter of 2011."

"Lastly, we made an important addition to our management team with the recent appointment of Mr. David King as our new CFO. Mr. King brings extensive financial and management credentials, strong public-company background, a global business perspective, and dedication to sustainability and social responsibility to Suntech. We believe that Mr. King will be a valued asset to the Company as we cement our position as the leader in the solar industry."

David King, Suntech's Chief Financial Officer, said, "I'm pleased to join the impressive team at Suntech. It is clear that we are well positioned to benefit from the explosive growth of an industry that is still in its infancy. My key priorities for 2011 will be to strengthen our sales forecast to improve predictability, continue efforts to restructure our balance sheet, and explore opportunities to grow our top line by developing financing solutions for our partners."

First Quarter 2011 Results

Total net revenues for the first quarter of 2011 were $877.0 million, compared to $945.1 million in the fourth quarter of 2010 and $588.0 million in the first quarter of 2010. The sequential decline of revenues was primarily due to a slight decline in shipments, resulting mainly from policy uncertainty in Italy, and a slight decline in the average selling price of PV products as a result of seasonality, particularly in Germany.

For the first quarter of 2011, gross profit was $166.9 million and gross margin was 19.0% compared to $153.4 million and 16.2%, respectively, in the fourth quarter of 2010; and $114.5 million and 19.5%, respectively, in the first quarter of 2010. The sequential increase in gross margin was primarily due to the lower cost of in-house silicon wafers used in production.

Operating expenses for the first quarter of 2011 increased to $72.4 million, which represented 8.3% of revenues, compared to $63.2 million, or 6.7% of revenues in the fourth quarter of 2010, and $51.0 million, or 8.7% of revenues, in the first quarter of 2010. The sequential increase in operating expenses was primarily due to $6.5 million of non-cash, amortization expenses related to the recent wafer acquisition and integration of the operating team at the wafer subsidiary.

Income from operations was $94.5 million for the first quarter of 2011, compared to $90.2 million in the fourth quarter of 2010 and $63.5 million in the first quarter of 2010.

Net interest expense was $30.3 million in the first quarter of 2011 compared to net interest expense of $23.5 million in the fourth quarter of 2010 and $22.6 million in the first quarter of 2010. Net interest expense in the first quarter of 2011 included $10.3 million in non-cash expenses of which $8.2 million was related to the outstanding convertible notes.

Foreign exchange gain was $29.9 million in the first quarter of 2011 compared to a foreign exchange loss of $2.8 million in the fourth quarter of 2010 and a loss of $24.5 million in the first quarter of 2010. The foreign exchange gain in the first quarter of 2011 was primarily related to the appreciation of the Euro versus the US Dollar.

Net other expense was $56.9 million in the first quarter of 2011, compared with net other expense of $0.4 million in the fourth quarter of 2010 and net other income of $2.8 million in the first quarter of 2010. The net other expense in the first quarter of 2011 was mainly due to mark-to-market losses from foreign exchange hedging activities.

The net impact of losses related to hedging and foreign exchange fluctuations was approximately $25.9 million in the first quarter of 2011.

Equity in earnings of affiliates in the first quarter of 2011 was $0.3 million compared to equity in earnings of affiliates of $323.8 million in the fourth quarter of 2010 and $4.6 million in the first quarter of 2010. The equity in earnings of affiliates in the fourth quarter of 2010 was primarily related to equity income from the Company's investment in GSF as a result of the appreciation in fair value of GSF investees, and equity income related to the acquisition of the wafer business.

Net income attributable to holders of ordinary shares increased to $31.9 million or $0.17 per diluted ADS for the first quarter of 2011, compared to net income of $358.0 million, or $1.89 per diluted ADS, for the fourth quarter of 2010 and net income of $20.7 million, or $0.11 per diluted ADS, for the first quarter of 2010.

In the first quarter of 2011, the major non-cash related expenses were share-based compensation charges of $3.7 million; $10.3 million of interest expenses, as mentioned above; and depreciation and amortization expenses of $38.2 million.

In the first quarter of 2011, capital expenditures totaled $128.5 million compared to $50.5 million in the fourth quarter of 2010 and $72.4 million in the first quarter of 2010. Capital expenditures in the first quarter of 2011 were related primarily to the expansion of wafer ingot and slicing production equipment.

Cash and cash equivalents totaled $782.6 million as of March 31, 2011, compared with $872.5 million as of December 31, 2010.

Inventory was $550.2 million as of March 31, 2011, compared with $558.2 million as of December 31, 2010.

Accounts receivable totaled $715.6 million as of March 31, 2011, compared with $515.9 million as of December 31, 2010. The increase in accounts receivable was primarily related to a significant proportion of shipments occurring in the third month of the first quarter of 2011.

Short-term borrowings were $1,626.6 million as of March 31, 2011, compared with $1,400.8 million as of December 31, 2010. The increase in short-term borrowings was due primarily to capital for capacity expansion and working capital requirements.

Business Outlook

In the second quarter of 2011, Suntech expects low single digit growth of PV shipments and relatively flat gross margin compared with the first quarter of 2011.

For the fiscal year ending December 31, 2011, Suntech reiterates shipment guidance of 2.2GW of solar products. Due to pricing pressure, Suntech has revised its full year revenue guidance to a range of $3.3 billion to $3.5 billion, subject to changes in foreign exchange rates. Consolidated gross margin for the full year 2011 is now expected to be in the high teens.

Suntech expects to achieve 2.4GW of installed cell and module production capacity by the end of the second quarter 2011, of which 600MW of PV cell capacity will be owned and operated by a joint venture. Suntech expects to achieve 1.2GW of installed wafer capacity by the end of 2011. Full year 2011 capital expenditure expectations are maintained in the range of $250 million to $270 million.

Guidance is based on an assumed exchange rate of $1.41 USD to the Euro.

First Quarter2011 Conference Call Information

Suntech management will host a conference call today, Wednesday, May 25, 2011, 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 May 25, 2011) to discuss the company's results.

Dial-in details for the earnings conference call are as follows:

US Toll Free:

+1.866.831.6224

US Toll/International:

+1.617.213.8853

UK:

+ 44.207.365.8426

Hong Kong:

+852.3002.1672

Passcode:

Suntech

A replay of the conference call may be accessed until May 31, 2011 by dialing:

US Toll Free:

+1-888-286-8010

US Toll/International:

+1-617-801-6888

Passcode:

84787325

Additionally, a live and archived webcast of this conference call will be available on the Investors section of Suntech's website at http://ir.suntech-power.com

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 15,000,000 photovoltaic panels to over a thousand 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 2.4GW and wafer capacity to 1.2GW by the end of 2011; expected second quarter 2011 shipments and gross margin; full year 2011 shipment expectations; and 2011 capacity and capital expenditures. 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

As of



Mar 31,

Dec 31,

Mar 31,



2011

2010

2010






ASSETS




Current assets:





Cash and cash equivalents

782,593

872,466

677,159


Restricted cash

118,146

142,533

162,762


Inventories

550,191

558,225

314,119


Accounts receivable

715,600

515,875

467,677


-----Investee companies of GSF

44,683

10,397

103,970


-----from others

670,917

505,478

363,707


Value-added tax recoverable

61,647

92,425

58,948


Advances to suppliers

119,281

84,385

50,195


Other current assets

220,852

146,389

268,391

Total current assets

2,568,310

2,412,298

1,999,251






Property, plant and equipment, net

1,420,339

1,326,218

816,558

Intangible assets, net

145,859

156,009

162,692

Goodwill

278,048

278,021

84,209

Investments in affiliates

556,692

545,884

330,958

Long-term prepayments

212,835

213,836

187,399

Long-term loan to suppliers

52,963

52,963

54,340

Amount due from related parties

93,341

94,139

180,515

Other non-current assets

152,524

137,675

107,378

TOTAL ASSETS

5,480,911

5,217,043

3,923,300






LIABILITIES AND EQUITY




Current liabilities:





Short-term borrowings, including current portion of long-term bank borrowings

1,626,574

1,400,776

835,541


Accounts payable

474,232

456,972

384,316


Convertible notes-current

4,238

406

4,218


Other current liabilities

484,218

511,787

213,263

Total current liabilities

2,589,262

2,369,941

1,437,338






Long-term bank borrowings

202,708

163,341

132,425

Convertible notes-non-current

555,433

551,153

524,242

Accrued warranty costs

88,772

81,016

60,116

Other long-term liabilities

145,160

171,408

138,724

Total liabilities

3,581,335

3,336,859

2,292,845






Total Suntech Power Holdings Co. Ltd. Equity

1,888,882

1,867,652

1,616,677

Noncontrolling interest

10,694

12,532

13,778

Total equity

1,899,576

1,880,184

1,630,455






TOTAL LIABILITIES AND EQUITY

5,480,911

5,217,043

3,923,300







SUNTECH POWER HOLDINGS CO., LTD.

CONSOLIDATED INCOME STATEMENT

(In $'000, except share, per share, and per ADS data)


Three months ended

Three months ended

Three months ended


Mar 31,

Dec 31,

Mar 31,


2011

2010

2010









Total net revenues

877,001

945,082

588,034

- Investee companies of GSF

33,644

53,616

-

- Others

843,357

891,466

588,034

Total cost of revenues

710,141

791,687

473,491





Gross profit

166,860

153,395

114,543





Selling expenses

20,133

22,455

19,984

General and administrative expenses

41,958

30,795

21,477

Research and development expenses

10,270

9,957

9,561

Total operating expenses

72,361

63,207

51,022





Income from operations

94,499

90,188

63,521





Interest expense

(32,382)

(25,945)

(23,436)

Interest income

2,048

2,415

851

Foreign exchange gain (loss)

29,911

(2,784)

(24,542)

Other (expense) income, net

(56,881)

(448)

2,776





Income before income taxes

37,194

63,426

19,170

Tax (expense) provision, net

(5,479)

(28,560)

(3,150)





Net income after taxes before noncontrolling interest and equity in (loss) earnings of affiliates

31,715

34,866

16,020

Added Equity in earnings of affiliates, net of taxes

341

323,750

4,622





Net income

32,056

358,616

20,642





Net (income) loss attributable to the noncontrolling interest

(127)

(598)

63





Net income attributable to ordinary shareholders of Suntech Power Holdings Co., Ltd.

31,929

358,018

20,705









Net income per share and per ADS:




- Basic

0.18

1.99

0.12

- Diluted

0.17

1.89

0.11





Shares and ADSs used in computation:




- Basic

180,152,807

179,834,510

179,298,622

- Diluted

182,466,874

196,053,288

182,268,491









Each ADS represents one ordinary share




For further information, please contact:


Rory Macpherson

Investor Relations Director

Suntech Power Holdings Co., Ltd.

Tel: +1-415-268-8975

Email: ir@suntech-power.com


Kristen McNally

Executive Vice President

The Piacente Group, Inc.

Tel: +1-212-481-2050

Email: suntech@tpg-ir.com

SOURCE Suntech Power Holdings Co., Ltd.