In 2012, the first quarter earnings report of Suntech Power gave insight into the consolidation in the solar industry. While financial numbers were not particularly construction, this was expected. After all, pricing pressure went on to make things difficult for this sector.
Regardless, the company had insights into the oversupply situation in the industry and its progress in the reduction of production costs. These factors suggested a process that will help the industry and pave the way for producers that could survive the difficulties of the time period in question.
Figures for Suntech
When it comes to finances, Suntech reported a rather poor first quarter. Shipments decreased 26.9 percent in the quarter and then 22.1 percent over the year. It saw revenues of $409.5 million, which is 54 percent less on the year. Its gross profit dropped to only $2.4 million, while the gross margin was no more than 0.6 percent.
This was largely a reflection of a preliminary provision for countervailing, as well as anti-dumping duties. With this in mind, the gross margin had actually been at the high end of its 3 to 6 percent guidance. The net loss was instead at $133 million, which can be interpreted as 74 cents per diluted ADS. The figure was 26 cents less than the expected 50 cents.
What the Numbers Mean
These figures are not super exciting either way. However, the company took a provision when it comes to the tariff issue. It also clarified that there would be zero need for more duty-related charges in the next quarters of the year. You see, the company transitioned to globally sourced cells.
How did the company view the consolidation process happening within its structure and the industry? It seems that Suntech is optimistic about demand. It also continued to expect shipments within its total capacity.
Regionally, the business is receiving good demand from the Americas and Europe. The East Asian and Middle Eastern markets were looking favorable for them as well.
In general, the overall investor and market sentiment had been weak. Europe was especially full of uncertainty during this time. It suggested that the market was probably going to stay short-term orientated and defensive.
On the other hand, Suntech had been expecting to see industry profitability anywhere from six to twelve months. Investors were advised to wait for more opportunities in the future.