SAN FRANCISCO and WUXI, China, Dec. 7, 2012 /PRNewswire/ -- Suntech Power Holdings Co., Ltd. (NYSE: STP), one of the world's largest producers of solar panels, today announced preliminary financial results for the third quarter ended September 30, 2012.
Preliminary results indicate that Suntech's shipments of photovoltaic (PV) products for the third quarter of 2012 declined by approximately 10% from the second quarter of 2012. Revenues in the third quarter of 2012 were approximately $387 million, a sequential decline of 18%. Approximately 88% of revenues were generated from the sale of PV modules, and 12% of revenues were generated from the sale of PV systems, cells, silicon wafers and production equipment. Gross margin in the third quarter of 2012 was approximately 5%. Gross margin benefited from the reversal of a prior provision for anti-dumping tariffs and countervailing duties in the United States of $18 million, which was partially offset by a $13 million provision for purchase commitments related to long-term supply agreements. In the third quarter of 2012, Suntech's operating expenses were approximately $98 million. Operating expenses were impacted by $6 million of legal fees related to GSF and other legal matters; $8 million in restructuring fees associated with the reduction of PV cell production capacity and headcount; and a $6 million impairment of intangible assets.
"In the third quarter, subsidy adjustments led to slower demand in European markets, however, quarterly shipments grew to Suntech customers in China, Japan and Thailand," said David King, Suntech's CEO. "With the soft demand environment expected to persist into early 2013, we have taken decisive steps to right-size production capacity and streamline operations, which will reduce production cost and operating expenses over time. We are also working with our banking partners and bondholders to ensure we have a capital structure that will enable Suntech to be successful in the current challenging industry environment. We are confident that these initiatives will strengthen our business and enable us to improve profitability as the market recovers."
Suntech expects shipments of PV products in the fourth quarter of 2012 to decline by a low single digit percentage compared to the third quarter of 2012. The gross margin in the fourth quarter of 2012 is expected to be slightly negative. Suntech now expects 2012 annual PV shipments to be in the range of 1.7GW to 1.8GW, compared to previous guidance of 1.8GW to 2.0GW.