In a statement, the company said: In the third quarter of 2010, Suntech expects shipments to increase by 15 to 20 percent sequentially. Consolidated gross margin in the third quarter of 2010 is expected to be in the mid to high teens, which is based on an assumed exchange rate of USD$1.29 to the euro.? Due to continuing strong demand, Suntech has increased its 2010 shipment target from 1.3 GW to 1.5 GW … Due to the [cell] capacity expansion, Suntech expects capital expenditures of approximately USD$300 to USD$350 million in 2010, compared to USD$200 million previously. Suntech intends to fund the additional capital expenditures with cash on hand, operating cash flow, and existing credit lines.
In terms of its Q2 financial results, the company achieved total net revenues of USD$625.1 million, which represents a 6.3 percent growth sequentially and 94.8 percent growth year-on-year. Overall, photovoltaics (PV) shipments increased by 11.9 percent on the last quarter and 181.7 percent in comparison to last year. It adds that consolidated gross profit was USD$113.9 million and gross margin was 18.2 percent, compared to consolidated gross profit of USD$114.5 million and gross margin of 19.5 percent in Q1. The sequential gross margin change, says the company, was primarily due to a lower average sales price as a result of the depreciation of the euro versus the U.S. dollar.
Operating expenses for Q2 were USD$132.9 million compared to USD$51.0 million in Q1. It says the increase was primarily due to the non-cash impairment of thin film equipment of USD$54.6 million, as the ceased the trial production of thin film. It continues by saying that loss from operations was USD$19.1 million for Q2 compared to income from operations of USD$63.5 million in Q1. The decline in income from operations was primarily due to the impairment of thin film equipment and the provision for prepayments to Shunda.
"The second quarter was another period of robust multi-market demand," said Dr. Zhengrong Shi, Suntech's chairman and CEO. "Strong operational execution ensured that we achieved our 1.4 GW capacity target, which drove higher than expected shipment and net revenue growth.We delivered greater shipments to valued customers across Germany and other European markets including Italy, France, Benelux and the Czech Republic.
"Our investments into our North American expansion continued to bear fruit as we broadened market share and prepared for US-based manufacturing that will commence in the fourth quarter. We also secured supply agreements to several large, high profile projects in emerging markets including Thailand, India and Israel where our globally respected brand, reliable product performance and deep sales channels have provided a solid foundation to form new partnerships."
He concluded: "With an outlook of ongoing growth in solar demand, we have decided to accelerate the next phase of capacity expansion and now target to achieve 1.8GW of cell and module capacity by the end of 2010. This will enable us to increase our 2010 shipment target from 1.3GW to 1.5GW to help support our growing global portfolio of Suntech customers and drive market share expansion."
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