China Sunergy suffers Q3 losses; misses shipment targets

At USD$145.8 million, Q3 revenue, while representing a 1.3 percent increase on Q2 2011, fell short of the $165.7 million reaped in Q1. The quarterly increase was said to have been boosted by higher photovoltaic module shipments, although corresponding revenues were offset by the lower average selling prices (ASPs).

As before, China Sunergy’s module business represented the lion’s hare of revenues, at $145.4 million. In total, photovoltaic shipments for Q3 2011 reached 116.2 megawatts (MW) of which 115.6 MW comprised modules. This figure pales in comparison to the between 140 and 160 MW it had expected to ship. It did say, however, that this was its highest quarterly shipment volume to date.

The company also recorded Q3 2011 gross losses of $19.9 million. Gross margin was additionally negatively affected at 13.7 percent – four to five percent lower than it has originally forecast. "This is mainly because the company made additional US$26.8 million in inventory provisions due to falling ASPs," wrote China Sunergy in a statement. Gross margin was, however, better than the 10.7 percent seen in Q1.

In terms of ASP for its photovoltaic modules, it fell from $1.64 per watt in Q2, to $1.26 in Q3. Meanwhile, blended wafer costs in Q3 were said to be $0.54 per watt, thus representing a sequential decrease of 31.6 percent. "The prices of polysilicon and wafers are expected to continue to decline in the fourth quarter," continued the company. Furthermore, non-silicon costs for cells and modules for Q3 2011 were $0.24 and $0.30 per watt respectively.

Operating expenses hit $17.9 million, representing 12.3 percent of total revenue, and increasing by 18.5 percent over Q2. For Q3, losses from operations were said to be $37.8 million and net losses were $31.3 million.

At the end of Q3 2011, inventory levels reached 84.9 million "after writing inventory down by approximately US$33.8 million to reflect current market valuation". On a positive note, levels decreased by 14.2 percent over Q2. To manage levels through to the year end, China Sunergy says it will plan production "strictly according to orders received".

In light of the continuing turbulent market conditions, the company does not expect Q4 to pick up. In terms of shipments, it expects to ship around 95 to 110 MW of products. For the full year, it estimates that between 395 and 410 MW will be shipped. This is down from the 470 to 500 MW it expected to ship at the end of Q2.

"Our third quarter results were disappointing, and we foresee more difficulties in the fourth quarter and winter months," commented CEO Stephen Cai.