Wall Street analysts will worry about the decrease in margins, but a move towards upstream integration with a wafer production facility acquisition might temper analyst worries. Guidance shows good growth in revenue and margins for 2011.
Fourth Quarter 2010 Highlights
- Total net revenues were $945.1 million in the fourth quarter of 2010, representing growth of 27.1% sequentially and 61.9% year-over-year.
- Total PV shipments increased 19.8% sequentially and 87.3% year-over-year.
- Consolidated gross profit margin was 16.2% in the fourth quarter of 2010.
Full Year 2010 Financial Highlights
- Total net revenues were $2,901.9 million in 2010, representing 71.4 percent growth year-over-year.
- Total PV shipments were 1,572 megawatts, representing 124.5% growth year-over-year.
- Consolidated gross profit margin was 17.4%.
- Suntech achieved 1.8 gigawatts of PV cell and module capacity, and 500 megawatts of silicon ingot and wafer capacity as of December 31, 2010.
Other 2010 Highlights
- Suntech was selected to supply a 150 megawatt (AC) project for Sempra Generation. We covered that 800,000 panel order win here.
- The firm closed its acquisition of a wafer production facility. In the fourth quarter, Suntech had $24 million in equity income from the wafer business.
- Suntech signed a framework agreement with Siemens Energy. Siemens has a pipeline to develop 80 megawatts of PV plants in six different countries.
Business Outlook
- In the first quarter of 2011, Suntech looks for PV shipments to be relatively flat compared with the fourth quarter of 2010.
- Due to the integration of wafer manufacturing capacity, consolidated gross margin in the first quarter of 2011 is expected to increase to approximately 20 percent.
- For the 2011 fiscal year, Suntech expects to ship at least 2.2 gigawatts of solar products and generate revenues of $3.4 billion to $3.6 billion.
- Consolidated gross margin for the full year 2011 is expected to be approximately 20 percent to 22 percent.
- Suntech expects to achieve 2.4 gigawatts of installed cell and module production capacity by the end of 2011.
Suntech shares rose to $9.60 in extended trade after closing at $9 on the New York Stock Exchange.
A Note on Margins
Here's the margin picture for Suntech over the past few years:
Here's a margin snapshot for Suntech and some of its sector and industry peers and direct competitors from December 2010. Source: Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months.
|
Company |
TTM Gross Margin |
TTM Operating Margin |
TTM Net Margin |
|---|---|---|---|
|
Suntech Power Holdings |
19.3% |
10.8% |
(3%) |
|
Trina Solar (NYSE: TSL) |
31.7% |
22% |
14.1% |
|
JA Solar Holdings (Nasdaq: JASO) |
22.4% |
17.1% |
12.3% |
|
MEMC Electronic Materials (NYSE:WFR) |
15.7% |
(0.9%) |
0.8% |