China Sunergy lowers shipment and margin guidance

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Several key factors are impacting business at PV module manufacturer, China Sunergy as it lowers shipment and revenue guidance for the year – along with lower shipment, revenue and margin for the second quarter of 2011. Citing customer solar project financing problems, higher production costs due to silver paste prices and faster than expected module average selling price (ASP) declines, gross margin for the second quarter is expected to collapse to just 1%.

Second quarter module shipment guidance was revised down from between 120MW and 130MW to between 100 and 110MW. China Sunergy said the shortfall was due to delays in the approval of project loans from some of its customers in Europe.

This may well be attributed to PV projects previously planned in Italy, which recently changed the FiT away from ground mounted installations to rooftop.

However, China Sunergy guided full year 2011 shipments would be down significantly compared to previous guidance, suggesting claimed ‘short-term factors’ have had a longer impact. The company cited financing delays for projects being undertaking by some of its customers were becoming commonplace and could lead to module order cancellations.

For the full year, China Sunergy expects module shipments to be between 580MW and 600MW, compared to previous guidance of between 670MW and 690MW. 

The biggest impact relates to gross margin, hit by higher non-silicon production costs while prices fall more severely than expected due to weak demand across key European markets.

Gross margin was said to be approximately 1%, compared to Company's previous guidance of between 7.5% and 8.5% for the second quarter. Gross margin relating to in-house module production is expected to be approximately 3%, compared to previous guidance of between 12% and 13%.

Stephen Cai, the Chief Executive Officer of CSUN, said in a statement, “In the interest of transparency and best practices, we wanted to give the market ample notice that our second quarter results will be substantially lower than previously forecasted. However, the sales we will not realize in Q2 will be realized in Q3. We are in this business for the long run and we believe in the long-term market growth for our products. Our procurement strategy has a great deal of flexibility built into it and we will do our best to deal with any volatility in the industry.”

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