Suntech lifts '08 revenue view
Wednesday August 20, 10:54 am ET
By Nichola Groom
LOS ANGELES (Reuters) - Chinese solar cell maker Suntech Power Holdings Co Ltd (NYSE:STP - News) reported sharply higher quarterly earnings on Wednesday and lifted its 2008 revenue target on burgeoning global demand for solar energy, sending its shares up 11.5 percent in early trading.
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The company also said that demand from Italy, Germany and other markets would offset a sharp fall-off in demand from Spain next year as that nation pares back generous government subsidies for solar power.
"We have far more demand in the pipeline than we intend to supply," Suntech Chairman and Chief Executive Zhengrong Shi said on a conference call with analysts.
About 40 percent of Suntech's second-quarter sales came from Spain, and concerns about a pullback in demand from that market have weighed on the company's stock in recent months.
In another positive sign for investors, Suntech forecast a 20 percent decline in polysilicon costs in 2009, but said contracted selling prices on its products for next year so far were better than expected.
Polysilicon is the key raw material used to make solar cells. Tight supply has crimped expansion in the fast-growing sector, though prices are expected to fall as new production comes online later this year.
Second-quarter net income was $65.2 million, or 38 cents per American Depositary Share, compared with $41.3 million, or 25 cents per ADS, a year earlier. Excluding items, the company earned 41 cents a share.
Wall Street analysts, on average, had been expecting earnings of 32 cents per ADS, according to Reuters Estimates.
Revenue jumped 51 percent to $480.2 million, well above the $443.53 million in revenue analysts had been expecting, thanks in part to a strong euro.
Gross margin excluding items was 24.7 percent, up from 22.5 percent in the first quarter.
Citing robust demand, Suntech raised its 2008 revenue forecast to a range of $2.05 billion to $2.15 billion from a range of $1.9 billion to $2.1 billion. The solar company also increased its target for shipment of photovoltaic cells by 20 megawatts to 550 MW.
Suntech has signed 200 megawatts (MW) of fixed price contracts for 2009 so far, and the biggest price decline from 2008 levels is about 5 percent, the company said. That's lower than the company's expectation that prices will fall between 8 percent and 10 percent next year, Chief Strategy Officer Steven Chan said in an interview.
The company's photovoltaic cell production capacity was 660 megawatts at the end of the quarter, and Suntech said it was on track to reach a gigawatt of capacity by the end of the year.
In other news, Suntech named Johnson Chiang Chief Operating Officer, replacing Graham Artes. Artes has assumed the roles of Managing Director of KSL-Kuttler and Suntech Corporate Vice President of Engineering.
Suntech shares were up $4.28, or 11.5 percent, at $41.41 in morning trade on the New York Stock Exchange. The stock has been hard-hit this year amid a broad sell-off in solar stocks prompted by concerns about Spanish subsidies and a weakened global economy.
(Reporting by Nichola Groom, Edward Tobin and Ajay Kamalakaran in Bangalore; Editing by Derek Caney) |
