WUXI, China, Feb 02, 2007 /Xinhua-PRNewswire via COMTEX News Network/ -- Suntech Power Holdings Co., Ltd.
(NYSE: STP), one of the world's leading manufacturers of photovoltaic (PV)
cells and modules, announced today an update to its fourth quarter 2006 and
2007 guidance, an amendment to the original agreement for the acquisition of
MSK Corporation, which was entered into in August 2006, setting the final
purchase price for the remaining stake in MSK at $53 million, and an update on
its integration initiatives for the MSK business.
For the year 2006, it is estimated that Suntech, including contribution
from MSK, shipped around 157.5MW to 159MW, an increase from its original
guidance of 130MW to 140MW. For the fourth quarter 2006, Suntech now
estimates that its total production output, excluding contributions from MSK,
will be in the range of 48MW to 49MW, compared to the original projection of
45MW to 46MW, and its total net revenues, excluding contribution from MSK,
will be in the range of $188 million to $192 million, compared to the original
projection of $166 million to $170 million. For the fourth quarter 2006,
MSK's production output is estimated to be in the range of 6.5MW to 7MW,
compared to the original projection of 14MW to 15MW. For the fourth quarter
2006, the revenue contribution from MSK is estimated to be between $30 million
to $32 million, compared to the original projection of $60 million to $64
million, with a net loss contribution of between $3 million to $4 million
after taking into effect the MSK minority interest.
For the first quarter 2007, Suntech currently projects that, including
contribution from MSK, its total production output target is in the estimated
range of 60MW to 62MW and its total net revenues target is in the estimated
range of $220 million to $228 million. Such guidance takes into account the
assumption that Suntech's total PV cell production capacity will remain
constant at 270MW until the second quarter of 2007 when additional capacity is
expected to become operational. In addition, the first quarter 2007 guidance
also takes into account the shorter month of February and the Chinese New Year
holiday. Suntech has increased its total PV cell production output target in
2007 from 250MW to 280MW. Suntech has also raised its expected 2007 year end
PV cell production capacity target from 390MW to 420MW.
''We are very pleased with the results and accomplishments of our core
business during 2006 which has increased our projected production output and
capacity for 2007,'' said Dr. Zhengrong Shi, Suntech's chairman and CEO. ''We
are taking proactive, quick and decisive action to reorient MSK's business to
focus on its strengths and reduce its cost structure.''
On February 1, 2007, Suntech, MSK and MSK's remaining shareholders entered
into an amendment to the original acquisition agreement. This amendment fixed
the consideration payable for Suntech's eventual acquisition of the remaining
one-third equity interest of MSK at $53 million. The consideration, payable
in the form of Suntech shares based on a price of $29.00 per share, is fixed
and is no longer tied to the future performance of MSK's business as
stipulated in the original acquisition agreement. Subject to mutual agreement,
however, the consideration may be payable in cash. The amendment will
accelerate the integration of MSK into Suntech's existing operations, which
has already commenced, with the acquisition of the remaining one-third
interest in MSK expected to be completed in late 2007.
The downward adjustments to MSK's results reflect Suntech's planned rapid
integration of MSK's operations and the strict cost-control measures
implemented to date. Suntech is in the process of selectively replacing
certain high-cost supply arrangements to leverage upon Suntech's superior
scale and cost advantages. Starting from February 2007, in order to take
advantage of Suntech's low cost manufacturing capabilities and operating
experience, MSK has halted production in Japan and will move key production
activities to China. These changes have had a net effect of decreases in
MSK's actual and expected production output for the fourth quarter of 2006 and
in 2007, respectively. Suntech expects MSK's operations will sustain a small
net loss in the near term but these changes will result in a more cost
effective MSK, which focuses on its core strength, the higher value added BIPV
MSK will continue to be preserved as a brand and its customer base will
continue to be supported. MSK will focus its resources on its core BIPV
strength, on continuing to engage in innovative BIPV product development and
on increasing its sales and marketing initiatives with a goal to expanding the
market reach of its BIPV products in Japan and beyond to other major
international PV markets. Recent senior hires and promotions at Suntech
America and Suntech Europe were undertaken in large part to expand the sales
and marketing activities of MSK's BIPV products.
Suntech also plans to extract additional synergies from the acquisition of
MSK by aligning the two companies' sales and marketing initiatives,
establishing joint sales channels and customer bases, promoting best practices
in production and research and development activities, as well as
consolidating back office functions.
''Our acquisition of MSK helped us both in terms of accelerating our
market expansion plans in Europe, particularly through the combination of
Suntech's and MSK's sales and marketing channels within Suntech Europe, and
also in terms of leveraging MSK's early mover advantage in the BIPV space by
increasing BIPV sales in Japan and other major international PV markets. By
taking immediate steps to optimize sales and reduce production costs while
maintaining high product quality, we expect to accelerate the integration of
MSK's customers, business and manufacturing operations into Suntech's highly
successful operations. This will accelerate the cost savings and
cross-selling synergies that are the objectives of this acquisition," said Dr.
Suntech will continue to provide MSK fourth quarter 2006 results and
related disclosure as part of its 2006 year-end earnings call, but given the
accelerated integration between Suntech and MSK's business operations, Suntech
will not continue to report separate results or give separate guidance for MSK
in the future.
Suntech Power Holdings Co., Ltd. is a leading solar energy company in the
world as measured by both production output and capacity of solar cells and
modules. 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 majority-owned subsidiary, MSK Corporation is one of the
top-ranked companies in the building-integrated photovoltaics (BIPV) space.
Suntech's customers are located in various markets worldwide, including key
markets throughout Europe, Japan, China and the United States. For more
information, please visit http://www.suntech-power.com .
Safe Harbor Statement
This press release contains forward-looking statements. These statements
constitute ''forward-looking" statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and as defined in 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. In particular, the estimated fourth quarter 2006 data,
and projected first quarter and fiscal year 2007 data, regarding production
output, total net revenues and consolidated net income, the business outlook
and quotations from management in this announcement, statements regarding
Suntech's beliefs and expectations about integrating the business and
operations of MSK Corporation and the resulting synergies and benefits, as
well as Suntech's strategic and operational plans, are forward-looking
statements. In addition, neither the review of Suntech financial statements
for the fourth quarter 2006, nor the audit as of and for the year ended
December 31, 2006 has been completed. Therefore Suntech's estimates and
projections contained in this press release are preliminary, subject to
adjustment and not necessarily indicative of the results that may be expected
for the full year ended December 31, 2006 or for any future periods. Given
the preliminary nature of these estimates, the actual total revenues and
production output of both Suntech and MSK may be materially different from the
current estimates. Forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements. Further information regarding these and
other risks is included in Suntech's filings with the U.S. Securities and
Exchange Commission, including its Annual Report on Form 20-F. Suntech does
not undertake any obligation to update any forward-looking statement as a
result of new information, future events or otherwise, except as required
under applicable law.
For more information, please contact:
VP of Business Development
Suntech Power Holdings Co., Ltd.
Ogilvy Public Relations Worldwide
SOURCE Suntech Power Holdings Co., Ltd.
Steven Chan, VP of Business Development of Suntech Power Holdings Co., Ltd.,
+86-510-8531-8910, or firstname.lastname@example.org; or Rory Macpherson, Consultant of Ogilvy
Public Relations Worldwide, +86-10-8520-6553, or email@example.com, for STP