In an unexpected move, the world's largest solar module manufacturer issued preliminary third quarter results and provided meagre insight into job losses and restructuring of manufacturing operations in the face of significant overcapacity within the industry.
Suntech said that Q3 shipments were expected to have risen by 15% over the previous quarter, with revenue above US$800 million. Gross margin is expected to be approximately 13%, which is at the high end of the previously guided range of 11% to 13%. Suntech also said it would incur a ‘significantly larger than expected non-cash foreign exchange translation loss.’
“With excess supply and a volatile macroeconomic environment, we recognize that the coming quarters will be challenging; however, with these actions we will become a leaner, more competitive organization,” commented Dr. Zhengrong Shi, Suntech's chairman and CEO, “By proactively implementing these initiatives, we are confident Suntech will be able to maintain its financial and operational stability, and emerge in an even stronger market position.”
Suntech further announced that it was targeting to reduce operating expenses by at least 20% in 2012. Capacity expansions would be put on hold in 2012, while the company expected to incur up to US$10 million of severance expenses in the second half of 2011.
In the previous quarter, Suntech’s chairman and CEO had said that the company remained on track to expand cell and module production capacity to 2.4GW by the end of 2011.