Friday, November 21, 2008
China's Suntech Power Holdings Co, the world's largest solar module maker, reported lower-than-expected quarterly profit and cut its full-year sales forecast because of the weak global economy, sending its shares tumbling by more than 30 percent to an all-time low.
Still, the company's sales for the third quarter jumped by more than 50 percent as demand for the clean energy systems continued to grow.
"The problem here is the banks. The customer wants more modules, but they have to have liquidity," Chairman and Chief Executive Dr. Zhengrong Shi told an analysts conference call. "We have to separate the market demand and the financial (situation)."
Third-quarter net income rose to 55.9 million, or 33 cents per American Depositary Share, from $53.3 million, or 32 cents a share, a year earlier, and well below the 42 cents per share analysts had on average expected, according to Reuters Estimates.
Margins suffered from the sharp 20 percent drop in the euro against the dollar and a slight increase in the cost of silicon wafers.
The company's average selling price for its modules is expected to drop 17 percent in the fourth quarter, mostly due to the weakness in the euro, Shi said.
Suntech forecast 2008 revenue at $1.85 billion to $1.87 billion, down from a previous range of $2.05 billion to $2.15 billion, because of the rapid weakening of the euro and unstable credit markets.
Deferment of customer orders also prompted the company to trim its full-year shipment target to 490 megawatts from 550 MW. Suntech is currently holding contracts to deliver 600 MW of modules in 2009.
The deferment in some fourth-quarter sales would allow the company to upgrade more of its production lines as part of its "Pluto" program that produces higher efficiency solar modules.
Because of the global economic woes, Shi said the Wuxi, China-based company had undertaken a number of cost-cutting measures, including renegotiating its polysilicon contracts.
Prices for polysilicon on the Chinese spot market, which accounts for about half of Suntech's supplies, had declined by more than 50 percent in the past month to less than $200 per kilogram, he said.
Suntech shares sank 32 percent, or $2.82, to $6.11 on the New York Stock Exchange, bringing its year-to-date loss to more than 92 percent.
By: DocMemory
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