Suntech Power Holdings Co., Ltd. (NYSE: STP), the world's largest producer of solar panels, today announced preliminary financial results for the third quarter ended September 30, 2011.
Suntech expects shipments for the third quarter of 2011 to increase by over 15% from the second quarter of 2011, in line with previous guidance. Revenues in the third quarter of 2011 are expected to exceed $800 million. Gross margin is expected to be approximately 13%, at the high end of the previously guided range of 11% to 13%.
Dr. Zhengrong Shi, Suntech's chairman and CEO, said, "We're pleased to achieve strong shipment and gross margin results in the third quarter in a highly competitive market. In times of rapid change in the marketplace, customers prefer to work with suppliers that are bankable, have an excellent track record and high performance products."
Initiatives to Optimize Operations
Suntech also announced it has accelerated the implementation of initiatives to optimize its operations and maintain its leading position in the solar industry. While continuing to focus on production efficiency, the initiatives target to reduce operating expenses by at least 20% in 2012; hold capacity expansion in 2012; and improve working capital by $200 million by the end of 2011.
Dr. Shi commented, "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. 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."
"Despite these short term challenges, we are very optimistic about the future of solar. Solar energy is already competitive with natural gas in many markets, and the cost will continue to decline year-on-year. As long as global markets continue to promote efficiency through free market competition, we have no doubt that solar will become an important pillar within the global energy mix. This is a crucial element of international efforts to reduce carbon emissions and combat climate change."
As a result of the effort to reduce operating expenses, Suntech expects to incur up to $10 million of severance expenses in the second half of 2011. Due to the volatility of the Euro to US dollar exchange rate, particularly in September, Suntech expects to incur a significantly larger than expected non-cash foreign exchange translation loss in the third quarter of 2011.