Suntech Power posts Q2 losses of US$259.5 million

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Suntech Power, the world’s largest panel manufacturer, has posted Q2 losses of US$259.5 million, despite better-than-expected top-line growth.

Strong shipments contributed towards quarterly revenue of US$830.7 million, a number well above both last year’s corresponding figure of US$625.1 million and the analysts’ projection of US$799.73 million.

However, this was still down on Q1’s revenue posting of US$877 million, a result Suntech has attributed to the continuing uncertainty surrounding PV subsidy cuts and falling prices in the industry. These factors also impacted on Q2 profit, which dipped dramatically from US$182.7 million in Q1 – and US$123.3 million in Q2 2010 – to US$33.7 million. Meanwhile, gross margin for the quarter was 4.1%, down from 20.8% and 19.7% in Q1 and Q2 2010 respectively.

Impacting heavily on these latest results was a settlement of US$211.9 million, incurred following the termination of a long-term agreement with MEMC. Suntech was also hit with a US$13.8 million loss when a similar contract with CSG Solar was ended.

“In a competitive market environment, our core operations performed well… With 48% shipment growth year-over-year, we achieved our shipment guidance and continued to improve our position in the Americas and emerging solar markets,” Suntech's chairman and CEO, Zhengrong Shi, said. “Looking forward, we anticipate the highly competitive market environment to continue for the next few quarters.”

In Q3, Suntech expects PV shipments to increase by a further 15% – in Q2 they rose by 2% month-on-month and 48% year-on-year. For the fiscal year 2011, Suntech expects to ship at least 2.2GW and generate revenues between US$3.2 billion and US$3.4 billion.

Suntech also plans to expand wafer capacity to 1.6GW by the end of 2011. Consequently, full year 2011 capital expenditures are expected to be between US$340 million and US$360 million. Suntech will maintain its cell and module production capacity at 2.4GW.

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