SAN FRANCISCO and WUXI, China, June 3 /PRNewswire-Asia/ -- 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.
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).
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: email@example.com In the United States: Kristen McNally Executive Vice President The Piacente Group, Inc. (Investor Relations Counsel, Suntech) Tel: +1-212-481-2050 Email: firstname.lastname@example.org
SOURCE Suntech Power Holdings Co., Ltd.