Suntech reiterates 2011 shipment target of 2.2GW

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

Updated: There were no obvious surprises in Suntech’s first-quarter financial results. Total net revenues were US$877.0 million, a decline of 7.2%, while shipments were only down 3.1% sequentially, but increased 62.9% year-over-year. In line with other major PV module manufacturers, Suntech noted the weak demand scenario in Italy due to the FiT review and overall challenging environment and pricing pressure. Suntech reiterated that it expected to ship 2.2GW of modules in 2011, but due to pricing pressure, the top end of its revenue guidance was reduced by US$100 million to a range of US$3.3 billion to US$3.5 billion.

“The first quarter of 2011 was a solid quarter that demonstrated the resilience of Suntech's business model under challenging market conditions,” commented Dr. Zhengrong Shi, chairman and CEO. “Despite a slight sequential decline in our shipments related to policy uncertainty in Italy, a long winter in Germany and first-quarter seasonality, we improved our gross margin from the fourth quarter and continued to diversify our sales across global markets. These outcomes reflect our ongoing efforts to enhance our competitiveness, mitigate policy risk, and position Suntech to increase our share in high-growth emerging markets. In particular, we were pleased to see greater demand in the Chinese solar market during the first quarter.”

Suntech reported gross profit of US$166.9 million and gross margin of 19.0%, one percentage point below previous guidance. Gross profit in the fourth quarter was US$153.4 million, with a gross margin of 16.2%. The company noted that the sequential increase in gross margin was primarily due to the lower cost of in-house silicon wafers used in production.

Income from operations was US$94.5 million for the first quarter of 2011, compared to US$90.2 million in the fourth quarter of 2010 and US$63.5 million in the first quarter of 2010.

Suntech also noted that it had reached 2.2GW of PV cell and module capacity by the end of the first quarter. Silicon ingot and wafer capacity had reached 1GW at the end of the first quarter.

Guidance for the second quarter sees shipments increasing only in the low single-digit range; some of Suntech's rivals have guided shipments to pick up strongly.

Suntech expects cell and module production capacity to reach 2.4GW by the end of the second-quarter 2011, of which 600MW of PV cell capacity will be owned and operated by a joint venture.

The company also noted that it expected to reach 1.2GW of installed wafer capacity by the end of 2011. Capital expenditure targets are to be maintained in the range of US$250 million to US$270 million.

Conference call updates
 
Shi noted in the conference call to discuss first-quarter results that its Pluto technology-based modules were now ramping to meaningful capacity. The executive said that it expects to ship 200MW of Pluto modules this year, with shipments already being made into Europe and shipments to the US expected to commence in the second half of 2011.
 
Andrew Beebe, Suntech’s chief commercial officer, noted that demand in Europe had been slower than expected so far this year, especially in Germany. Beebe said that Suntech didn’t expect the European market would pick up until the second half of the year. 
 
However, since the FiT review in Italy, demand has picked up but emphasis for growth was being concentrated in the North American market and emerging markets in Asia, according to Beebe. He noted that the company would be expanding its dealer network in the US this year, and had also expanded to a three work shifts at its module plant in Arizona.
 
However, module ASPs are expected to remain under pressure this year and could fall a further ‘high single-digit’ amount. ASPs have generally fallen about 10% so far this year, according to market research firms. 
 
Shi responded to analyst question on production utilization rates, noting that the utilization rate in Q1 was around 85% and that it was expected that to increase in Q2 to about 90%.

A spike in production costs were attributed to the rising price of silver paste and exchange rate fluctuations.

Shi also noted that polysilicon costs in the quarter were US$60/kg, and that a further decline in prices was expected going forward, though he did not provide a price cost range for the decline. Suntech has many long-term contracts for polysilicon. Wafer prices have dropped even faster, according to the company head. These cost reductions are expected to support margins despite ASP pressure.

Japan market was about 4% of revenue down from expectations. New policies should have significant impact on installations in 2012 onwards.
 
Later in the call, Shi responded to an analyst's question on what the polysilicon prices could decline to by the end of the year. Shi said that Suntech’s blended poly cost would be in the range of US$45/kg.
 
Module inventory levels had been a problem primarily in Europe but since Italy agreed a new FiT, inventory was moving out and in Germany customers were already increasing orders, he said. 
 

Shi also noted that 20MW of Pluto modules had been produced in Q1 and that the ramp was being helped by the slow demand overall for modules in the first quarter.

1 December 2021
Join this virtual conference on 1-2 December 2021 for expert presentations covering PV Module Technology, Supply & Site Optimisation for Utility-Scale. Delegates can access streamed presentations, session recordings and chat/messaging tools to connect with fellow delegates and speakers. Speakers include leading developers, manufacturers, testing and research institutes, including: NREL, Silicon Ranch, Sonnedix, Heliene, Powertis, LONGi Solar, JinkoSolar, PVEL, Risen Energy, Seraphim, STS, Trina Solar, Eternalsun Spire, QEERI, Fraunhofer, Estuary Capital Partners and VDE
2 December 2021
Intersolar is the world’s leading exhibition & conference series for the solar industry. As part of this event series, Intersolar India in Mumbai is India’s most pioneering exhibition and conference for India’s solar industry. It takes place annually and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. Since 2019, Intersolar India is held under the umbrella of The smarter E India – India’s innovation hub for the new energy world.
9 December 2021
The Smart Energy Council is hosting Australia’s second Virtual Smart Energy Conference and Exhibition on Thursday, 9 December 2021. This event will show that the industry powers on despite COVID-19 and we are standing together undeterred in spirit. Bringing our global community together using the latest technology.
13 January 2022
Intersolar North America and Energy Storage North America “Come Together” for the first time in Long Beach, CA—connecting installers, developers, utilities, technology providers, policy makers, and key stakeholders from around the world to advance the clean energy future. With best-in-class conference programming, integrated exhibits and pavilions, and the live Solar Games installer competition, #isnaesna21 will showcase the industry trends, innovative solutions, and emerging talent transforming the solar, energy storage, and e-mobility markets. Register today to redeem our exclusive offer for PV Tech readers—free expo hall or 20% off full conference pass.
1 February 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.

Read Next

November 26, 2021
Renewables developer and asset owner Grasshopper Energy has signed an agreement that could support the development of up to 1GW of solar in Romania by 2030.
November 26, 2021
Portugal has launched its latest solar auction that is set to allocate 262MW of floating PV to be installed at seven dams across the country.
November 26, 2021
The European Commission (EC) has approved a €2.27 billion (US$2.56 billion) Greek scheme to support 4.2GW of installed renewables capacity after assessing it in the context of EU state aid rules
PV Tech Premium
November 26, 2021
Average market prices for 182mm solar wafers fell by nearly 7% this week, falling to levels not seen in almost two months, however other material and component costs have remained high.
PV Tech Premium
November 26, 2021
Faced with the threat of curtailment as more renewables enter the grid, utility-scale solar developers are heightening their focus on hybrid PV-storage projects to take advantage of demand for flexibility services and falling battery costs.
November 25, 2021
Assurance and risk management provider DNV is acquiring cyber security firm Applied Risk as it looks to build a security practice focused on defending industrial assets against emergent cyber threats.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
December 1, 2021
Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal

Cyber Monday Flash Sale – 50% off our subscriptions

24 hours only