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Suntech stops manufacture of amorphous silicon thin film solar panels; releases second quarter financial results

Suntech Power Holdings Co., Ltd. has stopped manufacturing amorphous silicon thin film solar panels, in order to focus on crystalline silicon solar cells at its Shanghai, China facility. The “rapid cost reduction and improving competitiveness” of crystalline silicon solar panels was cited as the main reason. The company says that, as a result, it expects to incur a thin film equipment non-cash impairment charge of approximately USD$50 million to USD$55 million in the second quarter of this year.

The company has restructured its Shanghai facilities. Image: Wikipedia/Aapo Haapanen.

The company has also released its preliminary financial results for the second quarter of this year, ending June 30. Taking into account the impact of restructuring its Shanghai manufacturing facility and impairment charges related to its investment in Shunda Holdings Co., Ltd., a manufacturer of polysilicon and silicon wafers, the company expects total net revenues for the second quarter of this year to be in the range of USD$620 million to USD$630 million. Gross margin is expected to be in the range of 17.5 percent to 18.5 percent.

Commenting on the charges, Dr. Zhengrong Shi, Suntech's Chairman and CEO, commented: "While the thin film and Shunda related charges will significantly impact our second quarter financial results, they have no bearing on our core manufacturing operations, which are performing very well. Going forward, we will continue to focus on our primary mission of supplying the most reliable and high performance solar panels in the industry."

As a result of the depreciation of the Euro versus the USD during the period, the company says it expects the impact from foreign exchange loss net of hedging gains to be approximately USD$35 million for the second quarter of the year, in line with previously announced expectations. Additionally, it expects to incur non-cash charges of USD$106 million to USD$126 million in the second quarter of the year related to its investment and prepayments to Shunda. “Due to debt obligations, Shunda is currently undergoing significant reorganization,” it says.

The company goes on to say that it expects the total restructuring and impairment charges to have a negative impact of approximately USD$0.87 to $USD1.01 per American Depository Share (ADS) in the second quarter of the year. Inclusive of the restructuring and impairment charges, Suntech expects the net loss for the second quarter of the yearto be in the range of USD$147 million to USD$179 million, which corresponds to negative USD$0.82 to negative USD$1.00 per ADS.

Shi added: "Strong top line results for the second quarter reflect extremely robust global demand for solar. Customers in Europe, Asia, the Middle East and the Americas are increasingly recognizing the benefits of adopting solar and are choosing Suntech as a key partner. Our expected operating results for the second quarter reflect our competitive advantages in these markets."