Suntech Power Posts Lower Q3 Profit; Lifts FY09 PV Shipment View - Update

(RTTNews) - Suntech Power Holdings Co. Ltd. (STP | Quote | Chart | News | PowerRating), a Chinese manufacturer of crystalline silicon photovoltaic, or PV, module, Thursday reported lower third-quarter profit, hurt by a decline in revenues. The company also raised its PV shipment target for fiscal 2009.

The company's third-quarter net income attributable to holders of ordinary shares was $29.79 million or $0.16 per ADS, compared to $42.64 million or $0.25 per ADS in the year-ago quarter and $10 million, or $0.06 per ADS, for the second quarter of 2009.

Total net revenues declined to $473.11 million from $594.40 million a year ago. Sequentially, revenues were up 47.4% from $321 million in the second quarter of 2009.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.08 per share on revenues of $426.58 million. Analysts' estimates typically exclude special items.

Commenting on the results, Suntech's Chairman and Chief Executive Officer Zhengrong Shi said, "The significant pick up in demand was largely due to a seasonal rush before end-of-year policy adjustments and improving customer returns on investments in solar projects. It was also due to customer recognition of Suntech's attractive value proposition of exceptional product performance at a reasonable price."

Suntech said that gross margin for the core wafer to module business was 20% in the third quarter, compared with 19.1% in the second quarter of 2009.

Further, the company stated that it saw 100% sequential shipment growth in the U.S. market and the rapid development of a number of non-traditional PV markets such as the Czech Republic, Benelux, China. These complemented the strong growth in the German market.

During the quarter, the company's major non-cash related expenses were share-based compensation charges of $2.8 million, non-cash interest expenses of $11.3 million and depreciation and amortization expenses of $15.7 million. Capital expenditures, which were primarily for the construction of the thin film production facilities in Shanghai and other infrastructure projects to support expansion of Pluto capacity, totaled $25.4 million in the quarter.

Consolidated gross profit was $84.1 million and gross margin was 17.8%, compared with consolidated gross profit of $59.7 million and gross margin of 18.6% in the second quarter of 2009. The lower gross margins were primarily due to low profitability of the systems integration business in China that has been implementing some of China's first utility scale solar projects, the company noted.

Moving forward, the company expects fourth-quarter shipments to be at least 10% higher than the third quarter of 2009. Gross margin for the fourth quarter is expected to be relatively flat compared to the prior-year quarter.

The company also increased its full-year 2009 PV shipment target from 600MW to a range of 640MW - 660MW. Capital expenditures for the year are expected to be approximately $120 million.

Looking into next year, the company sees at least 75% shipment growth in 2010. Further, the company targets to expand to 1.4GW of PV cell and module production capacity by the middle of 2010, of which 450MW will be Pluto-enabled. Based on that, fiscal 2010 capital expenditures are expected to be approximately $200 million.

STP closed Wednesday's trading at $15.09, down $0.21, on a volume of 5.97 million shares.

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