SAN FRANCISCO and WUXI, China, Aug. 20 /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 second fiscal quarter ended June 30, 2009.
Second Quarter 2009 Highlights
-- Total net revenues were $321.0 million in the second quarter of 2009
-- Gross margin improved to 18.6% for the second quarter of 2009, compared
with 17.8% for the first quarter of 2009
-- Net income attributable to holders of ordinary shares was $10.0 million
or $0.06 per diluted American Depositary Share (ADS); each ADS
represents one ordinary share
-- Suntech's multi-crystalline Pluto powered module achieved world record
conversion efficiency of 15.6%
-- Suntech maintained PV cell production capacity of 1GW at the end of the
second quarter of 2009
"During the second quarter, we continued to demonstrate Suntech's ability to adapt to fluid market conditions and improve competitiveness," said Dr. Zhengrong Shi, Suntech's Chairman and CEO. "A seasonal pick up in demand combined with a gradual thawing of global financial markets and improving project returns led to sequential shipment growth in most of our major markets. In addition, despite pricing pressure, our continued reduction of silicon costs enabled us to improve gross margin in the second quarter."
"We are confident that the strategies that we are implementing today will position Suntech for strong growth over the next several years. For example, in China we are building relationships with regional governments and key development partners in anticipation of a national feed-in tariff program. In Japan, we have established a relationship with Yamada Denki that will expand our distribution reach and improve brand recognition. And we are gaining traction in emerging markets such as the Middle East through partnerships with regional players."
"In addition to our market expansion initiatives, we are making significant progress in technology development. Suntech's multi-crystalline Pluto module was recently accepted by the scientific journal Progress in Photovoltaics as the world's highest conversion efficiency multi-crystalline module with 15.6% conversion efficiency. In addition, our new state-of-the-art PV module testing facility, which is the largest in China, will help to enhance our efforts to deliver the most reliable and premium quality solar products in the market."
"We remain confident that these initiatives will help us gain access to the end consumer, improve our brand recognition, and increase our ability to compete in a volatile macro-economy. Suntech, as a leader in both low cost manufacturing and research and development, is well positioned to be among the first to reach grid parity in many markets. As a result of Suntech's competitive advantages and our downstream initiatives, we will continue to gain market share and further our position as a leader in the rapidly evolving PV industry."
RECENT BUSINESS HIGHLIGHTS
China Market
-- Suntech signed framework agreements with several provincial and city
governments in China to develop an aggregate of 1.8GW of photovoltaic
projects over the next several years.
-- Suntech has signed strategic framework agreements with China Energy
Conservation Investment Corporation (CECIC) and China Huadian New
Energy Development Co., Ltd (HNE) to develop solar projects in China.
Through these partnerships, CECIC and HNE will be primarily responsible
for project investment and development of solar projects, and Suntech
will be responsible for supplying turnkey solar solutions.
-- Suntech has established one of China's largest system integration and
project development teams with around 200 people. Suntech expects to
develop approximately 30MW of projects in the full year 2009, with the
majority in the second half.
U.S. Market
-- Suntech signed a contract with Recurrent Energy to deliver 5MW of
modules in Q4 2009 for California's largest photovoltaic system to date.
The project will more than triple San Francisco's total municipal solar
power output from 2MW today to 7MW upon completion in 2010.
-- Suntech has narrowed the search for a U.S. production and distribution
center site to two locations and expects to make a decision within the
next few months. The new facility demonstrates Suntech's commitment to
the long term growth of the North American market.
Global Markets
-- Suntech recently established an agreement with Yamada Denki Co., Ltd.,
Japan's most popular consumer electronics and home appliance chain, to
sell systems incorporating Suntech modules through all of its 450
retail outlets across Japan.
-- Suntech continued to gain traction in the Middle East and was selected
by Aldar Properties PJSC to supply over 1,120 solar panels for a 292 kW
solar system for The Shams Tower, an iconic building on Yas Marina
Circuit in Abu Dhabi.
Technology
-- Suntech achieved a new world record conversion efficiency of 15.6% on a
commercial grade multi-crystalline silicon PV module. The world record
conversion efficiency was accepted by the scientific journal Progress
in Photovoltaics.
-- Suntech's Pluto modules recently passed all the tests for the IEC 61215
certificate. Suntech has initiated commercial shipments of Pluto-
powered modules and currently expects to ship 10MW to 15MW of Pluto
products in 2009.
-- Suntech initiated production of amorphous silicon thin film solar
panels at its facility in Shanghai. The initial panels are exhibiting
a conversion efficiency of approximately 7%.
-- Suntech opened a world-class PV module testing facility in
collaboration with Underwriters Laboratories. Through UL's Witness
Testing Data Program, PV module tests may be conducted under the
supervision of highly experienced UL personnel and subsequently awarded
certification, enabling Suntech to bring solar products to market
faster.
Financing Activities
-- Suntech received a $50 million convertible loan from International
Finance Corporation with a conversion price of $18.00 per ADS in July
2009. The loan has a fixed rate coupon of 5.0% per annum payable on
June 15 and December 15 in each year. If not converted, the loan will
be repayable in full 7 years after the date of drawdown.
-- Suntech closed a follow-on public offering of 23,000,000 ADSs. The
aggregate amount of ADSs sold reflects the exercise in full by the
underwriters of their option to purchase up to 3,000,000 additional
ADSs to cover over-allotments. The Company received aggregate net
proceeds of $277.7 million, after the deduction of related expenses.
-- Suntech secured a $200 million syndicated loan facility from the China
Development Bank. $120 million of this facility was drawn down in the
second quarter of 2009.
-- In the second quarter of 2009 Suntech repurchased an aggregate of $30.8
million principal amount of its 0.25% Convertible Senior Notes due 2012
for a total consideration of $29.1 million. As of June 30, 2009,
Suntech had $225.0 million principal amount of 2012 convertible notes
outstanding.
Second Quarter 2009 Results
Total net revenues for the second quarter of 2009 were $321.0 million, an increase of 1.7% from $315.7 million in the first quarter of 2009.
Total net revenues from the investee companies of GSF were $15.3 million in the second quarter of 2009 compared with $100.5 million in the first quarter. Sales to the investee companies of GSF were conducted under terms comparable to those with unrelated parties, and the revenue and profit related to the sales activities during the second quarter of 2009 were fully recognized during the same period.
For the second quarter of 2009, gross profit was $59.7 million and gross margin was 18.6% compared to gross profit of $56.3 million and gross margin of 17.8% in the first quarter of 2009. The increase in gross profit was primarily due to Suntech's silicon wafer cost and total cost structure falling faster than sales price in the second quarter of 2009.
Operating expenses for the second quarter of 2009 were $38.6 million compared to $35.1 million in the first quarter of 2009. The increase was primarily due to additional hires to improve sales and marketing efforts and a bad debt provision.
Income from operations was $21.1 million for the second quarter of 2009, which was flat with the first quarter of 2009.
Net interest expense was $24.3 million in the second quarter of 2009 compared to net interest expense of $21.6 million in the first quarter of 2009. Net interest expense in the second quarter of 2009 includes $11.6 million of non-cash interest expenses of which $10.3 million was related to the adoption of FASB Staff Position No APB14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB14-1").
Foreign currency exchange gain was $17.5 million in the second quarter of 2009 compared to a loss of $6.2 million in the first quarter of 2009. The foreign currency gain in the second quarter was primarily related to the appreciation of the Euro versus the USD.
Net other expense was $2.5 million in the second quarter of 2009, compared with $12.6 million of net other income in the first quarter of 2009. The net other income in the first quarter of 2009 was mainly due to $9.3 million in gains from repurchases of the 2012 convertible senior notes and $3.2 million in gains from mark-to-market valuation of foreign exchange forward contracts. The net other expense in the second quarter was primarily due to a loss from mark-to-market valuation of foreign exchange forward contracts.
Net income attributable to holders of ordinary shares for the second quarter of 2009 was $10.0 million, or $0.06 per diluted ADS compared to a net income of $1.8 million, or $0.01 per diluted ADS, in the first quarter of 2009.
In the second quarter of 2009, the major non-cash related expenses were share-based compensation charges of $4.2 million; $11.6 million of non-cash interest expenses; and depreciation and amortization expenses of $14.4 million.
In the second quarter of 2009, capital expenditures, which were primarily for the construction of the thin film production facilities in Shanghai, and to retrofit existing production capacity to enable production of PV modules based on our high efficiency Pluto technology, totaled $20.9 million.
Cash and cash equivalents increased to $760.5 million as of June 30, 2009 from $406.0 million as of March 31, 2009. The increase was primarily due to the follow-on public offering of 23 million ADSs during the quarter from which we received aggregate net proceeds of $277.7 million and an increase in long term bank borrowings due to a syndicated loan of $120 million from the China Development Bank.
Accounts receivable was $292.1 million as of June 30, 2009, compared with $265.4 million as of March 31, 2009. The increase was primarily due to an increase in credit terms in line with industry trends.
Accounts receivable due from investee companies of GSF was $108.4 million as of June 30, 2009, compared with $104.9 million as of March 31, 2009. Suntech has been closely monitoring the settlement on this account receivable and expects full collection on this account receivable will be made no later than the end of 2009.
Business Outlook
Suntech expects third quarter 2009 shipments to be more than 50% above the second quarter 2009. Gross margin in the third quarter of 2009 is expected to be relatively flat compared to the second quarter of 2009.
Suntech expects shipments in the fourth quarter of 2009 to be slightly lower than the third quarter of 2009 due to seasonality. As a result, Suntech has revised full-year 2009 shipment expectations to approximately 600MW. Suntech intends to hold PV cell production capacity at 1GW in 2009 until demand visibility improves. Suntech expects capital expenditures to be in the range of $100 million to $120 million in 2009.
Second Quarter 2009 Conference Call Information
Suntech management will host a conference call today, Thursday, August 20, 2009 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 August 20, 2009) to discuss the Company's results.
To enhance presentation of information and data during the conference call, Suntech has provided a set of PowerPoint slides which are posted on the main page of the Investor Center of Suntech's website at
http://www.suntech-power.com .
To access the conference call, please dial +1-617-597-5310 (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 September 3, 2009 by dialing +1-617-801-6888 (passcode: 15504914).
About Suntech
Suntech Power Holdings Co., Ltd. (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's patent-pending Pluto technology for crystalline silicon solar cells improves power output by up to 12% compared to conventional production methods.
Suntech also offers one of the broadest ranges of building-integrated solar products under the MSK Solar Design Line(TM). Suntech designs and delivers commercial and utility scale solar power systems through its wholly owned subsidiary Suntech Energy Engineering and will own and operate projects greater than 10 megawatts in the United States through Gemini Solar Development Company, a joint venture with Renewable Ventures, a Fotowatio company. With regional headquarters in China, Switzerland and San Francisco and sales offices worldwide, Suntech is passionate about improving the environment we live in and dedicated to developing advanced solar solutions that enable sustainable development. For more information, please 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 our ability to ensure our initiatives help us to gain access to the end consumer, improve our brand recognition and improve our ability to compete; our ability to reach grid parity; our ability to develop PV projects based upon our signed framework agreements with various governments, CECIC and HNE; our ability to bring products faster to market under the UL Witness Testing Data Program; our expected Pluto production capacity and volume of Pluto shipments in 2009; our ability to collect receivables from GSF investee companies by the of 2009; and our outlook for Q3 revenue and gross margin and full year shipments 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. Effective January 1, 2009, as a result of the adoption of Statement of Financial Accounting Standards, or SFAS 160,
Non-controlling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51.and FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement), our condensed consolidated income statement for the three months ended June 30, 2008 has been re-casted for comparable purpose. The following tables set forth the unaudited condensed consolidated balance sheet as of March 31, 2009 and June 30, 2009, the adjusted unaudited condensed consolidated income statement for the three months ended June 30, 2008, and the unaudited condensed consolidated income statements for the three months ended March 31, 2009 and June 30, 2009.
SUNTECH POWER HOLDINGS CO., LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(In $'000)
As of As of
March 31, June 30,
2009 2009
ASSETS
Current assets:
Cash and cash equivalents 405,995 760,544
Restricted cash 179,134 180,369
Inventories 242,690 269,705
Accounts receivable - Investee
companies of GSF 104,940 108,410
Accounts receivable - Others 160,414 183,735
Value-added tax recoverable 87,099 78,433
Advances to suppliers 70,513 53,824
Other current assets 255,477 200,790
Total current assets 1,506,262 1,835,810
Property, plant and equipment, net 720,821 733,684
Intangible assets, net 163,619 165,221
Goodwill 80,930 83,566
Investments in affiliates 225,358 229,080
Long-term prepayments 195,346 181,992
Long-term loan to suppliers 56,150 55,882
Amount due from related parties 216,387 203,636
Other non-current assets 104,112 102,642
TOTAL ASSETS 3,268,985 3,591,513
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings, including
current portion of long-term bank
borrowings 791,706 806,833
Accounts payable 153,382 120,130
Convertible notes-current 239,341 214,781
Other current liabilities 228,893 178,607
Total current liabilities 1,413,322 1,320,351
Long-term bank borrowings 17,486 136,174
Convertible notes-non-current 446,964 453,746
Accrued warranty costs 43,025 45,630
Other long-term liabilities 119,861 115,435
Total liabilities 2,040,658 2,071,336
Total equity 1,228,327 1,520,177
TOTAL LIABILITIES AND EQUITY 3,268,985 3,591,513
SUNTECH POWER HOLDINGS CO., LTD.
CONSOLIDATED INCOME STATEMENT
(In $'000, except share, per share, and per ADS data)
Three Three Three
months months months
ended ended ended
June 30, March 31, June 30,
2008 2009 2009
As adjusted
Total net revenues 480,179 315,656 320,959
- Investee companies of GSF -- 100,547 15,298
- Others 480,179 215,109 305,661
Total cost of revenues 364,382 259,369 261,263
Gross profit 115,797 56,287 59,696
Selling expenses 14,751 11,401 11,501
General and administrative expenses 20,318 18,820 22,808
Research and development expenses 3,310 4,923 4,322
Total operating expenses 38,379 35,144 38,631
Income from operations 77,418 21,143 21,065
Interest expenses (26,825) (26,743) (25,884)
Interest income 8,653 5,098 1,577
Foreign exchange gain/(loss) 2,493 (6,191) 17,530
Other (expense) income (6,329) 12,567 (2,546)
Income before income taxes 55,410 5,874 11,742
Tax (provision)/benefit (3,517) 78 168
Net income after taxes before
noncontrolling interest and equity
in earnings of affiliates 51,893 5,952 11,910
Equity in loss of affiliates -- (3,874) (2,293)
Net income 51,893 2,078 9,617
Add: Net loss (income) attributable
to non-controlling interest 356 (292) 357
Net income attributable to holders
of ordinary shares 52,249 1,786 9,974
Net income attributable to ordinary
shareholders per share and per
ADS:
- Basic 0.34 0.01 0.06
- Diluted 0.31 0.01 0.06
Shares and ADSs used in
computation:
- Basic 153,935,960 155,881,265 164,483,191
- Diluted 185,244,933 156,794,603 172,611,156
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
