Suntech Power Holdings Co., Ltd. (STP)
Q1 2012 Earnings Conference Call
May 23, 2012 08:00 ET
Rory Macpherson – Director of Investor Relations
Dr. Zhengrong Shi – Chairman and Chief Executive Officer
Andrew Beebe – Chief Commercial Officer
David King – Chief Financial Officer
Susie Min – Deutsche Bank
Brandon Heiken – Credit Suisse
Ming Xu – Jefferies
Timothy Arcuri – Citigroup
James Medvedeff – Cowen & Company
Pranab Sarmah – Daiwa Capital
Chris Kovacs – Robert Baird
Marina Shvartsman – Macquarie
Brian Gamble – Simmons & Company
Aaron Chew – Maxim Group
Previous Statements by STP
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» Suntech Power Holdings CEO Discusses Q1 2011 Results - Earnings Call Transcript
Thank you for standing by, and welcome to the First Quarter 2012 Suntech Power Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) Please be advised that this conference is being recorded today, May 23, 2012.
I would now like to hand the conference over to your speaker today, Rory Macpherson, Director of Investor Relations. Thank you. Please go ahead.
Hello everyone and welcome to Suntech's first quarter 2012 earnings conference call. My name is Rory Macpherson, Suntech's Director of Investor Relations.
On the call today Dr. Zhengrong Shi, Suntech's Chairman and CEO will give an overview of our performance and operational initiatives; Andrew Beebe, our Chief Commercial Officer will discuss sales and markets; and David King, our Chief Financial Officer will discuss our financial performance.
During the call, we will make certain forward-looking statements in an effort to assist you in understanding the company and its results. The forward-looking statements will be made under the Safe Harbor provisions of the U.S. Private Securities Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, Suntech's future results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our earnings release issued today and our SEC filings. Suntech does not undertake any obligation to update any forward-looking statement except as required under applicable law.
To enhance our presentation of information and data during this conference call, we have provided a set of PowerPoint slides for your reference. This presentation is posted on the main page of the Investor Relations section of our website. We have allocated one hour for the conference call and will endeavor to field as many questions as possible within that timeframe. Please limit questions to one question per person and one follow-up. This conference call is being recorded and the webcast replay will also be available on the Investor Relations section of our website after this call. Please note that all figures mentioned during the call are in U.S. dollars unless otherwise specified.
I will now turn the call over to Suntech's Chairman and CEO, Dr. Zhengrong Shi.
Dr. Zhengrong Shi
Hello and thank you for joining us. Today, I will discuss some of the highlights of the quarter and outline our plans to improve our competitiveness and the market share in 2012.
Please turn to page 4. In the first quarter, our shipments were slightly better than expected declining 27% sequentially compared to our projection of 30% decline, excluding the impact of provisions for the U.S. anti-dumping and countervailing duties. We also met our gross margin targets and continued to rollout product innovations that improve ease of installation, deliver greater performance, and a cost savings to our customers.
I will discuss our initiatives to reduce cost in more detail shortly. During the quarter, we continued to position Suntech’s unparalleled global sales network to benefit from the policy changes and the change we are seeing in end markets. Andrew Beebe will give you some more color about demand dynamics in the first quarter and where we are seeing strength in the second quarter and the year.
Before I go on, I would like to comment on the U.S. Department of Commerce division to impose countervailing duties and anti-dumping tariffs of over 34% on Suntech solar cells produced in China. These tariffs do not take into account the global interdependence of solar industrial supply chain and are not justified by that. For example, Thailand was selected as the surrogate country to determine the normal value of solar products, even though Thailand has no major solar manufacturing and does not provide reasonable comparison to China. Regardless of the final outcome due to Suntech’s global sourcing channels, no products that we manufacture in the U.S. or ship to the U.S. today are subject to these tariffs. Still this entire process has damaged the American solar industry and makes it harder for solar to compete against fossil fuels. We stand with a vast majority of companies in the global solar industry in our position to trade barriers, which is the top market brief inefficiency, raise products and make solar less competitive. We will continue to work with our global peers and partners up and down the value chain to try to avoid escalation of trade changes. We are looking forward to resolving this matter in the coming months and we hope the whole industry can now get back to the extremely important mission of delivering cost effective solar energy.
Now, turning back to the first quarter results. Operationally, we sustained our focus on working capital management and cash preservation. We shifted to the maximum production to reduce inventory and make further progress on collection efforts. The result of this disciplined working capital management was a $65 million reduction of accounts receivable and inventories.