China Sunergy expects adverse 2H

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Net loss for the quarter plummeted, from a loss of US$12.5 million in Q1 2012, and $16.9 million in Q2 2011, to hit $33.4 million. Looking ahead to Q3, Sunergy says it forecasts further net losses, due to a continuation of the challenging solar market conditions, which are expected to last throughout the year.

On the back of photovoltaic product shipments totaling 150.3 MW, of which 144.5 MW comprised modules, the Chinese manufacturer reaped revenues of $110.4 million in Q2 2012, compared to compared to $68.5 million in Q1 2012, and $144 million in Q2 2011. In Q3, it expects to ship between 80 and 85 MW of photovoltaic products, and for the FY, just 400 to 420 MW. In April, the company unveiled its plans to ramp capacity up to 1GW.

In a statement released, Sunergy said ASP’s for its modules sank by 12.8% sequentially, to reach $0.75. "This number reflects the tough market conditions, especially in Europe, and the depreciation of the Euro against the U.S. dollar during the period," it said.

"ASPs fell faster than manufacturing costs, and currency fluctuations imposed a large impact on our financial reports. We will be reviewing and strengthening our hedging policies going forward," added CEO, Stephen Cai.

In terms of its other products, Sunergy said wafer costs were $0.28/W, down $0.03 on Q1 2012. It added that both wafer and polysilicon costs are expected to decline in 2H. Meanwhile, it said, "Conversion costs of cells and modules manufactured realized continuous decreases in the second quarter of 2012 to US$0.16 and US$0.23 per watt, respectively."

Sunergy’s Q2 2012 net loss per ADS took a beating at $2.26 on both a basic and a diluted basis, compared to a net loss of $0.71 in Q1 2012, and $1.27 in Q2 2011. Gross profit also dropped from $3.7 million in Q2 2011, and $728,000 in Q1 2012, to a loss of $285,000, thus leading to a negative Q2 gross margin of 0.3%, compared to 1.1% in Q1 2012.

Conversely, Q2 2012 operating expenses were fairly level, decreasing slightly from $18.8 million in Q1 2012, to $16.9 million, but still marginally up from $15 million in Q2 2011.

In addition to its aforementioned shipment guidance, China Sunergy believes Q3 will see its gross margin to breakeven. Cai added, "In the second quarter, we have made further progress in markets such as Bulgaria, Australia, China and Japan, and we have begun executing our downstream strategy in Europe and elsewhere.

"We will continue to optimize cost structure, pursue technological advances, and invest strategically in viable downstream projects. We are confident that we have the right business strategy in place to position ourselves to meet the challenges ahead."