press

Press Releases

<< Back
Suntech Power Reports Fourth Quarter and Fiscal Year 2005 Unaudited Financial Results
          Increasing Adoption of Solar Energy Initiatives Worldwide
                 Drives Strong Demand for Suntech's Products

    Highlights:

    - Fourth quarter 2005 net revenues up 136.3% to $89.0 million over fourth
      quarter 2004

    - Fiscal year 2005 net revenues up 165.0% to $226.0 million over fiscal
      year 2004

    - Fourth quarter 2005 net income was $10.6 million, or $0.10 per basic
      share

    - Fiscal year 2005 net income was $30.6 million, or $0.31 per basic share

    - Production capacity reached 150MW at the end of 2005

WUXI, China, Feb. 13 /PRNewswire-FirstCall/ -- Suntech Power Holdings Co., Ltd. (NYSE: STP), a leading global solar energy company, today announced fourth quarter 2005 total net revenues of $89.0 million and net income of $10.6 million, or $0.10 per basic share. Total net revenues for fiscal year 2005 were $226.0 million and net income was $30.6 million, or $0.31 per basic share.

"Increasing adoption of solar energy initiatives worldwide, particularly in China and Spain, drove strong demand for our solar cell and module products in the fourth quarter," said Dr. Zhengrong Shi, Suntech's chairman and CEO. "This led to our solid financial performance for the fourth quarter and the year as we continue to be one of the fastest growing pure play PV manufacturers in the world.

"We significantly grew our production capacity in 2005 to 150MW. The demand for solar energy worldwide continues to exceed supply, and the market is rapidly absorbing any increases in capacity. By the end of 2006, we expect our capacity to reach 240MW," added Dr. Shi.

Fourth Quarter 2005 Results

Suntech's total net revenues for the fourth quarter increased 136.3 percent to $89.0 million over fourth quarter 2004 total net revenues of $37.7 million, and 57.2 percent over third quarter 2005 total net revenues of $56.6 million. Growth in net revenues in the fourth quarter was due to increases in production volumes and demand, and improvements in the average sales prices of Suntech's photovoltaic ("PV" or "solar") cell and module products.

Suntech successfully executed its 2005 expansion plans adding a 30MW solar cell production line that became operational at the end of the fourth quarter of 2005. This increases Suntech's annual capacity to 150MW from 120MW as of September 30, 2005. During the fourth quarter, Suntech derived approximately 63.7 percent of total net revenues from PV modules.

    Fourth Quarter 2005 PV Net Revenues by Products

                             Q4 2005       % of Q4      Growth        Growth
                                           2005 Net     vs. Q4        vs. Q3
                                           Revenues      2004          2005

    PV Cells               $31.7 million     35.7 %    +1,729.6%     +126.6%
    PV Modules             $56.7 million     63.7 %       +57.8%      +34.8%
    PV System Integration  $ 0.6 million      0.6 %    +6,301.8%       +2.6%
    Total                  $89.0 million    100.0 %

Gross profit for the fourth quarter was $23.6 million, representing an increase of 83.7 percent over fourth quarter 2004 gross profit of $12.8 million, and an increase of 39.6 percent over third quarter 2005. Gross margin decreased to 26.5 percent, compared with 34.1 percent in the fourth quarter 2004 and 29.8 percent in the third quarter 2005. The decrease in gross margin in the fourth quarter 2005 as compared with the fourth quarter 2004 and the third quarter 2005 was largely attributable to an increase in the cost of raw materials, which constituted the largest portion of cost of revenues. The sequential decrease in gross margin was also partly due to a $1.6 million inventory write-off for substandard wafers as well as an increase in share-based compensation to $1.2 million.

The Company has continued to focus on technology research and development to achieve high performance solar cells at low cost per watt. As of December 31, 2005, the conversion efficiency rates of the Company's monocrystalline and multicrystalline silicon PV cells reached 17.0 percent and 15.3 percent, respectively, up from 16.5 percent and 15.0 percent, respectively, at the end of the third quarter 2005.

Income from operations for the fourth quarter was $12.5 million, or 14.1 percent of total net revenues, compared with $11.0 million, or 29.3 percent of total net revenues in the fourth quarter of 2004, and $10.3 million, or 18.2 percent of total net revenues in the third quarter 2005. The decrease in operating margin compared with both prior periods was primarily due to decrease in gross profit margins as well as increases in share based compensation and research and development expenses.

Net income for the fourth quarter was $10.6 million, representing a 4.0 percent decrease from the same quarter in the prior year and a 21.9 percent increase from the third quarter 2005. Basic net income per share for the fourth quarter 2005 was $0.10.

Full Year 2005 Financial Results

For the full year 2005, Suntech's total net revenues increased 165.0 percent to $226.0 million over total net revenues in 2004 of $85.3 million. For the full year 2005, Suntech derived approximately 24.2 percent of total net revenues from PV cells driven mainly by the strong demand from China's domestic market.

    Fiscal Year 2005 PV Net Revenues by Products

                        2005         % of      Growth      2004        % of
                                      2005       vs.                   2004
                                       Net      2004                    Net
                                    Revenues                          Revenues

    PV Cells        $54.7 million     24.2%    645.5%   $7.3 million    8.6%
    PV Modules     $170.1 million     75.3%    118.4%  $77.9 million   91.4%
    PV System
     Integration     $1.2 million      0.5%  2,012.6%   $0.1 million    0.0%
    Total          $226.0 million    100.0%            $85.3 million  100.0%

Gross profit for the full year 2005 was $68.6 million, representing an increase of 173.0 percent from the prior year's gross profit of $25.1 million. Gross margin increased slightly to 30.3 percent, compared with 29.4 percent in the previous year. Income from operations for the full year 2005 was $42.7 million, or 18.9 percent of total net revenues, and a 113.2 percent increase over 2004 income from operations of $20.0 million, or 23.5 percent of total net revenues. The decline in operating margin in 2005 is primarily due to the increase in general and administrative expenses related to Suntech's business expansion, restructuring and share based compensation charges.

Net income for the full year 2005 was $30.6 million, representing a 55.0 percent increase from the previous year. Basic net income per share was $0.31 in 2005 compared to $0.22 in 2004.

Balance Sheet and Cash Flow

As of December 31, 2005, Suntech had cash and cash equivalents of $359.3 million. Net operating cash flow for the full year 2005 was $22.6 million, compared with $2.6 million for 2004. Suntech had capital expenditures of $29.7 million in 2005, compared with $9.4 million for 2004.

Business Outlook

Suntech expects its total net revenues in the first quarter 2006 to be in the range of $75 million to $80 million, representing year-over-year growth in the range of 95 percent and 108 percent.

Fourth Quarter and Year End 2005 Conference Call

Suntech's earnings announcement conference call will take place on February 13, 2006 at 7:00 p.m., Eastern Time, which corresponds to February 14, 2006 at 8:00 a.m., Beijing/Hong Kong time. To access the conference call, please dial +1 617 213 8858 (in the U.S.) or +852 3002 1672 (in Hong Kong) and ask to be connected to the Suntech earnings call.

A live webcast of the conference call will be available on the investor relations section of Suntech Power's website at http://www.suntech-power.com.

A replay of the conference call will be available for two weeks on the investor relations section of Suntech Power's website or by dialing +1 617 801 6888 (passcode: 12676998).

About Suntech Power Holdings Ltd.

Suntech Power Holdings Co., Ltd. is a leading solar energy company in the world as measured by production output in 2004. Suntech provides solar solutions for a green future. Suntech designs, develops, manufactures and markets a variety of high quality, cost effective and environmentally friendly PV cells and modules for electric power applications in the residential, commercial, industrial and public utility sectors. Suntech's customers are located in various markets worldwide, including Germany, Spain, China and the United States. For more information, please visit http://www.suntech-power.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Suntech's strategic and operational plans, contain forward-looking statements. Suntech may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Suntech's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: expectations regarding the worldwide demand for electricity and the market for solar energy; the company's beliefs regarding the effects of environmental regulation, the lack of infrastructure reliability and long-term fossil fuel supply constraints; the importance of environmentally friendly power generation; expectations regarding governmental support for the deployment of solar energy; expectations regarding the scaling of the company's manufacturing capacity; expectations with respect to the company's ability to secure raw materials in the future; future business development, results of operations and financial condition; and competition from other manufacturers of PV products and conventional energy suppliers. Further information regarding these and other risks is included in Suntech's registration statement on Form F-1, as amended, filed with the U.S. Securities and Exchange Commission. Suntech does not undertake any obligation to update any forward-looking statement, except as required under applicable law.


                       SUNTECH POWER HOLDINGS CO., LTD.

              SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS DATA

                      (In $'000, Except Per Share Data)

                                             2005         2004         2005
                                              Q4           Q4           Q3
                                            (Note)       (Note)       (Note)

    Net revenues                           88,989       37,651       56,624
    Cost of revenues                       65,407       24,810       39,728

    Gross profit                           23,582       12,841       16,896

    Operating expenses
     Selling expenses                         946          803        1,017
     General and administrative expenses    8,008          825        4,720
     Research and development expenses      2,084          180          826

    Income from operations                 12,544       11,033       10,333
     Interest expenses                       (773)        (408)        (570)
     Interest income                          174           26           25
     Other (expenses) income                 (105)          35         (161)

    Income before income taxes             11,840       10,686        9,627
     Tax (expenses) benefit                (1,500)         335         (859)

    Net income after tax before
     minority interests and equity
     in gain of affiliates                 10,340       11,021        8,768
     Minority interest                         29            0            5
     Equity in gain (loss) of an
      affiliate                               244          (24)        (103)

    Net income                             10,555       10,997        8,660
    Deemed dividend on Series
    A redeemable convertible
     preferred shares                         784            0          972
    Net income attributable to holders
     of ordinary shares                     9,771       10,997        7,688

    Net income per share and per ADS
     - Basic                                 0.10         0.12         0.09
     - Diluted                               0.09         0.12         0.07

    Shares used in computation
     - Basic                           98,123,263   90,000,000   90,000,000
     - Diluted                        103,104,352   90,000,000  127,898,426

Note: The quarterly summary statement of operations data are unaudited. The summary consolidated balance sheet data as of December 31, 2005 and summary consolidated statement of operations data for the year ended December 31, 2005 are derived from Suntech's unaudited consolidated financial statements. The summary consolidated balance sheet data as of December 31, 2004 and summary consolidated statement of operations data for the year ended December 31, 2004 are derived from Suntech's audited consolidated financial statements.


                       SUNTECH POWER HOLDINGS CO., LTD.

                   SUMMARY CONSOLIDATED BALANCE SHEET DATA

                                  (In $'000)

                                                       As of December 31,
                                                      2005            2004
                                                     (Note)          (Note)
    ASSETS

    Current assets:
     Cash and cash equivalents                     359,324          19,122
     Inventories                                    40,428          17,472
     Advances to suppliers                          24,001           2,195
    Total current assets                           436,479          51,913

    Property, plant and equipment, net              39,717          13,211

    TOTAL ASSETS                                   481,664          68,468

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:
    Short-term borrowings, including current
     portion of long-term bank borrowings           52,193          34,442
    Total current liabilities                       71,976          40,225

    Long-term bank borrowing                         3,717               0
    Total liabilities                               78,312          41,072

    Total shareholders' equity                     401,923          27,396

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     481,664          68,468

Per Share Data: Ordinary share of par value $0.01; 90,000,000 shares issued and outstanding, as of December 31, 2004; 147,487,707 shares issued and outstanding as of December 31, 2005


                       SUNTECH POWER HOLDINGS CO., LTD.

              SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS DATA

                      (In $'000, Except Per Share Data)

                                               For the Year Ended December 31,
                                                   2005              2004
                                                  (Note)            (Note)
    Net revenues:
     PV cells                                    54,653             7,331
     PV modules                                 170,129            77,898
     PV System integration                        1,218                58
    Total net revenues                          226,000            85,287

    Cost of revenues:
     PV cells                                    35,441             5,269
     PV modules                                 121,183            54,862
     PV system integration                          814                43
    Total cost of revenues                      157,438            60,174

    Gross profit                                 68,562            25,113

    Operating expenses
     Selling expenses                             3,667             1,750
     General and administrative expenses         18,874             2,889
     Research and development expenses            3,358               465
    Total operating expenses                     25,899             5,104

    Income from operations                       42,663            20,009
     Interest expenses (including share
      based compensation of $5,652,952
      for 2005)                                  (7,907)           (1,036)
     Interest income                                296                57
     Other (expense) income                        (758)              167

    Income before income taxes                   34,294            19,197
     Tax (expenses) benefit                      (3,753)              611

    Net income after taxes before minority
     interest and equity in gain of affiliates   30,541            19,808
     Minority interest                               34                 0
     Equity in gain (loss) of an affiliate          121               (51)
    Net income                                   30,628            19,757
    Deemed dividend on Series A
     redeemable convertible preferred shares      2,406                 0
    Net income attributable to holders
     of ordinary shares                          28,222            19,757

    Net income per share and per ADS
     - Basic                                       0.31              0.22
     - Diluted                                     0.30              0.22

    Shares used in computation
     - Basic                                 92,047,507        90,000,000
     - Diluted                               95,360,059        90,000,000
SOURCE  Suntech Power Holdings Co.
    -0-                             02/13/2006
    /CONTACT:  In China - Cindy Shao, Suntech Power Holdings Ltd.,
+86-510-8534-5000, ir@suntech-power.com; Christina Splinder, Ogilvy Public
Relations Worldwide, +86-10-8520-6550, Mobile: +86-1350-1096-802,
christina.splinder@ogilvy.com; In the United States - Thomas Smith, Ogilvy
Public Relations Worldwide, +1-212-880-5269, thomas.smith@ogilvypr.com /
    /Web site:  http://www.suntech-power.com /
    (STP)

CO:  Suntech Power Holdings Co.
ST:  China
IN:  OIL
SU:  ERN ASI CCA ERP

MC
-- NYM282 --
6818 02/13/2006 18:00 EST http://www.prnewswire.com