SAN FRANCISCO and WUXI, China, Aug. 31, 2012 /PRNewswire-Asia/ -- Suntech Power Holdings Co., Ltd. (NYSE: STP), the world's largest producer of solar panels, today announced preliminary financial results for the second quarter ended June 30, 2012.
Preliminary results indicate that Suntech's shipments of photovoltaic (PV) products for the second quarter of 2012 increased by approximately 33% from the first quarter of 2012, higher than previous guidance of a 20% increase in PV shipments. Revenues in the second quarter of 2012 were approximately $471 million, a sequential increase of 15%. Approximately 93% of revenues were generated from the sale of PV modules, and 7% of revenues were generated from the sale of PV systems, cells, silicon wafers and production equipment.
Gross margin in the second quarter of 2012 was approximately negative 10%. Gross margin was impacted by a non-cash inventory provision of $76 million. The impact of the non-cash inventory provision on gross margin was 16%.
In the second quarter of 2012, Suntech's operating expenses were approximately $133 million. Operating expenses were impacted by a $56 million non-cash provision related to a prepayment for a long-term supply contract, which Suntech is currently disputing. Suntech generated positive operating cash flow of approximately $5 million during the quarter.David King, Suntech's CEO, said, "In the second quarter, greater demand from European markets, China, Japan and Australia drove sequential shipment growth, and we continued to progress towards our annual cost targets. However, the global imbalance between supply and demand, and the challenging price environment continue to impede profitability." "As we are operating in a highly competitive market, it is extremely important to focus on financial and operational discipline. In the second half of this year, we will continue to drive down cost, negotiate better terms with our suppliers, and stringently manage working capital," continued Mr. King. "We will also manage the balance between price and volume in order to improve margins. For that reason, we have decided to reduce our annual shipment target to the range of 1.8GW to 2.0GW."