DOW JONES NEWSWIRES
Suntech Power Holdings Co. (STP) second-quarter earnings plunged 80% as revenue tumbled due to lower prices for its solar-power products, even though demand increased sequentially. The solar power industry has been hurt by excess capacity, tight credit and bloated inventories, in contrast to the prior year when surging energy prices boosted demand. However, the sector is likely to benefit from favorable government policies in China and the U.S. Suntech last month signed nonbinding agreements with four Chinese provinces and cities to develop up to 1.8 gigawatts of solar projects, enough to power 1.35 million to 1.8 million U.S. homes. Chairman and Chief Executive Zhengrong Shi said, "A seasonal pickup in demand combined with a gradual thawing of global financial markets and improving project returns led to sequential shipment growth in most of our major markets." The company expects shipments to rise 50% sequentially in the third quarter, but pull back slightly in the fourth quarter because of seasonality. As a result, it expects shipments for the year at the low end of its reduced May view for 600 to 700 megawatts. It also expected $100 million to $120 million in capital spending, compared with its earlier estimate of $100 million. For the quarter ended June 30, the company reported a profit of $10 million, or 6 cents an American depositary share, down from $52.3 million, or 31 cents an ADS, a year earlier. Revenue fell 33% to $320.9 million, which included $15.3 million from investee companies of the European-based Global Solar Fund. Analysts polled by Thomson Reuters most recently were looking for earnings of 2 cents on revenue of $343 million. Gross margin fell to 18.6% from 24.1%. ADSs closed at $16.40 Wednesday and were flat premarket. The ADS price is down roughly 60% in the past year. -By Tess Stynes, Dow Jones Newswires; 212-416-2481; tess.stynes@dowjones.com |
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