Suntech reports fourth quarter and full year 2009 financial results
San Francisco, USA/WuXxi, China - Suntech Power announced financial results for its fourth fiscal quarter and full year ended December 31, 2009.
Total net revenues for the fourth quarter of 2009 were $583.6 million, an increase of 23.4% from $473.1 million in the third quarter of 2009. Gross margin for the core wafer to module business was 26.3% in the fourth quarter of 2009, compared with 20.0% in the third quarter of 2009. For the fourth quarter of 2009, consolidated gross profit was $138.7 million and gross margin was 23.8% compared to consolidated gross profit of $84.1 million and gross margin of 17.8% in the third quarter of 2009. The increase in gross margins was primarily due to a decrease in both the cost of silicon wafers and processing cost for the period.
Operating expenses for the fourth quarter of 2009 were $51.7 million compared to $39.3 million in the third quarter of 2009. The increase in operating expenses was primarily due to an increase in selling expenses in line with revenue growth and an increase in R&D expenses due to continued investments in Pluto, process automation, and new technology development. Of the R&D expenses approximately $4 million were non-recurring in nature. Income from operations increased 95% to $87.0 million for the fourth quarter of 2009 compared to $44.8 million in the third quarter of 2009.
Net interest expense was $24.2 million in the fourth quarter of 2009 compared to net interest expense of $23.5 million in the third quarter of 2009. Net interest expense in the fourth quarter of 2009 included $12.7 million in non-cash expenses of which $11.6 million was related to the adoption of FASB ASC Codification 470-20-65. Foreign currency exchange loss was $13.2 million in the fourth quarter of 2009 compared to a foreign currency exchange gain of $10.5 million in the third quarter of 2009. The foreign currency loss in the fourth quarter was primarily related to the depreciation of the Euro versus the USD.
Net other expense was $3.6 million in the fourth quarter of 2009, compared with $3.8 million of net other expense in the third quarter of 2009. The net other expense in the fourth quarter was primarily due to losses from mark-to-market valuation of foreign exchange forward contracts. Net income attributable to holders of ordinary shares was $49.9 million, or $0.27 per diluted ADS for the fourth quarter of 2009, compared to net income of $29.8 million, or $0.16 per diluted ADS, for the third quarter of 2009. In the fourth quarter of 2009, the major non-cash related expenses were share-based compensation charges of $1.6 million; $12.7 million of non-cash interest expenses, as mentioned above; and depreciation and amortization expenses of $20.9 million.
In the fourth quarter of 2009, capital expenditures totaled $35.4 million. Cash, cash equivalents and short-term principal guaranteed investment increased to $1,034.0 million as of December 31, 2009 from $855.7 million as of September 30, 2009. The increase was primarily due to positive cash flows from our core business and stringent working capital management. Accounts receivable was $384.4 million as of December 31, 2009, compared with $420.4 million as of September 30, 2009. Days sales outstanding were 60 days in the fourth quarter of 2009, compared to 81 days in the third quarter of 2009.
Accounts receivable due from investee companies of GSF was $110.2 million as of December 31, 2009, compared with $112.1 million as of September 30, 2009. The decrease was due to the depreciation of the Euro versus the USD during the fourth quarter. Accounts payable was $264.2 million as of December 31, 2009, compared with $196.8 million as of September 30, 2009. The increase in accounts payable was primarily due to extended credit terms with suppliers.
Full Year 2009 Results
Total net revenues for the full year 2009 were $1,693.3 million, compared with $1,923.5 million in 2008. The year-over-year decline was primarily due to the decrease in the average selling price of PV products. For the full year 2009, consolidated gross profit was $338.8 million and gross margin was 20.0% compared to consolidated gross profit of $342.9 million and gross margin of 17.8% for the full year 2008. The increase in gross margins was primarily a result of the successful implementation of initiatives to reduce silicon wafer costs and non-silicon wafer production costs, which decreased faster than the average selling price for PV products.
Operating expenses for the full year 2009 were $164.8 million compared to $160.4 million for the full year 2008. Income from operations was $174.0 million for the full year 2009 compared to $182.5 million for the full year 2008. Net income attributable to holders of ordinary shares increased 181.8% to $91.5 million, or $0.53 per diluted ADS for the full year 2009, compared to net income of $32.5 million, or $0.20 per diluted ADS, for the full year 2008. In the full year 2009, capital expenditures, which were primarily related to the construction of production facilities in Shanghai and other infrastructure projects to support expansion of Pluto capacity, totaled $142.6 million. Depreciation and amortization expenses totaled $66.3 million.
Business Outlook
Suntech expects first quarter 2010 shipments to increase by 5 to 10% compared to the fourth quarter of 2009. Consolidated gross margin in the first quarter of 2010 is expected to be in the range of 18% to 20%. Suntech targets to ship more than 1.25GW of PV products in the full-year 2010. The Company continues to target expansion to 1.4GW of PV cell and module production capacity by the middle of 2010, of which 450MW will be Pluto-enabled. Capital expenditures are expected to be approximately $200 million in 2010.
Source: IWR Online, 05 Mar 2010
