Suntech Power Holdings Co., Ltd. (NYSE: STP), the world's largest producer of solar panels, announced preliminary financial results for the fourth quarter and full year ended December 31, 2011.
Suntech exceeded shipment guidance for the fourth quarter of 2011. The Company previously expected shipments to decline by approximately 20% from the third quarter of 2011, but currently anticipates shipments to decline by approximately 10% from the third quarter of 2011. Revenues in the fourth quarter of 2011 are expected to be in the range of $610 million to $630 million. Gross margin is expected to be in the middle of the previously guided range of 9% to 11%.
Suntech expects shipments for the full year 2011 to be approximately 2.09GW, above previous guidance of 2GW. Revenues for the full year 2011 are expected to be in the range of $3.13 billion to $3.15 billion.
In the fourth quarter of 2011, due to continuing stringent working capital management, Suntech significantly reduced accounts receivable and inventory by a total of approximately $450 million, which was partially offset by an approximate $85 million decrease in accounts payable. This result exceeds Suntech's stated goal to reduce accounts receivable and inventory by a total of $200 million in the fourth quarter of 2012. Net debt declined by approximately $200 million in the fourth quarter of 2011. Cash and restricted cash increased from $567.7 million as of September 30, 2011 to over $700 million as of December 31, 2011.
Dr. Zhengrong Shi, Suntech's Chairman and CEO, said, "Our sales and operations teams both performed well in the fourth quarter, enabling us to achieve key goals and improvements across our business. We exceeded shipment guidance and improved our cash position through ongoing management of accounts receivable and inventory. We also completed the impairment assessment for the third quarter of 2011. The charges that we incurred were all non-cash and will not impact our operations moving forward. We will continue to implement the initiatives necessary to maintain our position as the leading supplier of solar panels."
Impairments of Goodwill, Intangibles, Certain Investments and Other Long Term Assets
As stated on the Company's third quarter 2011 earnings announcement, due to the challenging solar market conditions and the significant reduction in the Company's market capitalization in the third quarter of 2011, Suntech initiated an assessment of its goodwill, intangibles, and certain investments. Suntech recently completed its analysis and has recorded impairment charges of $571 million in the third quarter of 2011. These charges consist of $407 million in non-cash impairments of goodwill and intangible assets; $109 million of non-cash impairments of Suntech's investments in, and prepayments to, Nitol Solar and Shunda; and a $55 million non-cash write-down of equipment and facilities.
Suntech will publish updated financial results for the third quarter of 2011 together with its financial results for the fourth quarter and full year 2011 on March 8, 2012 at 8am EST. Please visit Suntech's investor relations website at ir.suntech-power.com for dial-in details for the conference call. The estimates presented in this press release are preliminary, unaudited and subject to further adjustments.