Wednesday, Chinese solar energy company Suntech Power Holdings Co., Ltd. (STP) reported a 57.9% rise in profit for the second quarter, helped by strong demand. Adjusted earnings per share and sales increased and topped the market projections. Further, the company provided third-quarter revenue guidance above analysts' estimate, and lifted fiscal 2008 revenue forecast. Suntech also revealed certain senior management changes.
The manufacturer of photovoltaic, or PV cells and modules posted net income for the second quarter of $65.21 million or $0.38 per American Depository Share, or ADS, higher than $41.30 million or $0.25 per ADS, in the same quarter last year.
The results included charges related to share-based compensation of $4.3 million and effect of purchase price allocation of $1.8 million, compared with $7.1 million $0.4 million in the same order, last year.
Excluding one-time items, income climbed to $71.3 million or $0.41 per ADS from $48.9 million or $0.29 per ADS in the prior year.
On average, 16 analysts polled by First Call/Thomson Financial expected earnings of $0.32 per share.
Second-quarter total net revenues grew 51.3% to $480.18 million from $317.38 million in the year-ago quarter, and beat analysts' consensus estimate of $439.33 million. Standard PV Modules revenues were $447.2 million in the quarter, representing 93.1% of total revenues.
Dr. Zhengrong Shi, Suntech's Chairman and chief executive officer said, "A healthy demand environment and smooth execution led to strong revenue growth in the second quarter."
Consolidated gross margin increased to 24.1% for the second quarter from 20.3% last year, and non-GAAP gross margin reached 24.7% compared with 21.1% in 2007. The growth in gross margin reflected higher average selling price driven by strong demand for the company's solar products, together with the appreciation of the Euro against the US Dollar.
Income from operations was $77.4 million for the second quarter, an increase of 87.4% from last year. Operating margin was 16.1%. Non-GAAP income from operations climbed 73.1% to $84.4 million, with an operating margin of 17.6%.
Suntech's PV cell production capacity was 660 megawatt, or MW, at the end of the second quarter 2008.
As of June 30, 2008, Suntech had cash and cash equivalents of $605.2 million, compared to $1.02 billion as of March 31, 2008.
Looking ahead, Suntech said it expects third-quarter revenues to be in the range of $570 million- $580 million, based on current operating conditions. Analysts, on average, expect revenues of $542.65 million for the third quarter, with estimates ranging between $486.00 million-$581.10 million. Consolidated gross margin is expected to be in the range of 22% to 23% for the quarter.
Shi said, "We are fully booked for the second half of 2008 and expect these excellent demand conditions to continue through 2009. As it stands, we have already signed over 200MW of fixed price, fixed volume sales contracts with strong pricing for 2009. We are also in the process of finalizing approximately 500MW of additional sales contracts, which we expect to complete by the end of the third quarter."
Further, Suntech raised its full-year 2008 revenue guidance to a range of $2.05 billion - $2.15 billion from prior range of $1.9 billion - $2.1 billion, citing robust demand coupled with strong execution. Analysts, on average, expect revenues of $2.06 billion for the full-year.
Suntech also increased its full-year 2008 PV product shipment target to approximately 550MW from earlier estimated 530MW. Suntech said it projects 1GW of installed PV cell production capacity by year-end 2008. The company added that it is on track to have one 30MW Pluto production line fully operational by the end of 2008, and roll out further lines in 2009.
In addition, Suntech announced the resignation of Songyi Zhang from its Board of Directors. The company also revealed some senior management changes.
Graham Artes has assumed the roles of Managing Director of KSL-Kuttler and Suntech Corporate Vice President of Engineering, while Johnson Chiang was appointed to assume Artes' former role as Chief Operating Officer. The company named Robin Chen General Manager of Suntech to oversee the thin film plant being constructed in Shanghai, replacing Frank Zhang, who has left Suntech for personal reasons. The company also said Philip Yue has been appointed Vice President of Value Chain Development for Suntech.
STP closed Tuesday's regular trading session at $37.13, up $1.04, on a volume of 4.6 million shares. In the pre-market activity, shares increased $1.37 or 3.69% to $38.50.
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