China Sunergy Announces Fourth Quarter and Full Year 2012 Financial Result

  China Sunergy Announces Fourth Quarter and Full Year 2012 Financial Result

Company Improved Conversion Cost for Cells by 12% Sequentially

Improved Conversion Cost for Modules by 13% Sequentially

Expanded Production into Europe

Estimates 2013 Total Shipments to Range 550MW - 600MW

PR Newswire

NANJING, China, April 12, 2013

NANJING, China, April 12, 2013 /PRNewswire/ -- China Sunergy Co., Ltd.
(NASDAQ: CSUN) ("China Sunergy" or "the Company"), a specialized solar cell
and module manufacturer, today announced its financial results for the fourth
quarter and full year ended December 31, 2012.

Mr. Stephen Cai, CEO of China Sunergy, commented, "Despite tough market
conditions, our fourth quarter results showed our strong conversion cost
improvements and well-controlled operating expenses. For 2012, we made great
strides in further reducing our manufacturing costs, increasing sales in some
of our key markets such as Germany, Japan and the United Kingdom, and more
importantly expanding production into Turkey.We believe that while the
overall global solar industry persistently struggles with oversupply, China
Sunergy has continually marched forward with our strategy and conversion cost
roadmap, which we believe should improve our position when the market
eventually turns around."

Fourth Quarter 2012 Financial Highlights

  oTotal revenue was US$54.4 million, a decrease of 8.6% from US$59.5 million
    in the third quarter of 2012.
  oShipments totaled 78.4MW, a decrease of 5.0% (4.1MW) from 82.5MW in the
    third quarter of 2012.Module shipments were 77.4MW, or 98.8% of total
    shipments.
  oAverage selling price ("ASP") for the Company's solar modules was US$0.64
    per watt, a 9.9% decrease from that of the third quarter of 2012.
  oConversion costs for cells improved 11.8% sequentially to US$0.15 per
    watt, from US$0.17 in the third quarter of 2012. Conversion costs for
    modules improved 13.0% sequentially to US$0.20 per watt, from US$0.23 in
    the third quarter of 2012.
  oGross losses were US$2.0 million, and gross margin was negative 3.7%.
    Non-GAAP(1) ^ gross losses were approximately US$0.8 million, and Non-GAAP
    gross margin was negative 1.5%, caused by the lower ASP and partly offset
    by the substantial conversion cost improvements.
  oNet losseswere US$70.5million, attributable to, among other things, a bad
    debt provision of US$26.1 million and higher tax expenses of US$24.4
    million during the fourth quarter of 2012. Non-GAAP net losses were
    US$43.2 million.
  oNet loss per ADS was US$5.27, compared to net loss per ADS of US$1.74 in
    the third quarter of 2012.Non-GAAP net loss per ADS was US$3.23.
  oOperating cash outflow was US$41.1 million, compared to cash outflow of
    US$3.6 million in the third quarter of 2012.
  oCash, cash equivalents and restricted cash totaled US$409.9 million, as of
    December 31, 2012.

Full Year 2012 Financial Highlights

  oTotal net revenue was US$292.7 million, a decrease of 48.3% from US$566.3
    million in the prior year.
  oShipments totaled 391.0 MW, a decrease of 7.0% from 420.3 MW in the prior
    year. Module shipments were 379.0MW, or 96.9% of total shipments.
  oGross losses were US$1.2 million, and gross margin was negative 0.4%.
    Non-GAAP gross losses were US$2.0 million, and Non-GAAP gross margin was
    negative 0.7%.
  oNet losses were US$133.6 million, and net margin was negative 45.6%.
    Non-GAAP net losses were US$87.0 million.
  oNet loss per ADS was US$9.99, compared to a net loss per ADS of US$7.05 in
    the prior year.Non-GAAP net loss per ADS was US$6.51.

    China Sunergy's Non-GAAP financial measures are its corresponding GAAP
    financial measures as adjusted by excluding costs related to certain
(1) charges, including inventory and bad debt provisions. Please refer to
    "Reconciliations of non-GAAP financial measures to the nearest comparable
    GAAP measures" at the end of this press release.

Fourth Quarter & Full Year 2012 Financial Review

Total Revenue and Shipments

For the fourth quarter of 2012, total revenue was US$54.4 million, a decrease
of 8.6% from the third quarter of 2012, due primarily to a combination of
lower shipments and lower ASP. Revenue for full-year 2012 was US$292.7
million, a decrease of 48.3% from the prior year.

Shipments for the fourth quarter were 78.4MW, and total shipments in 2012 were
391.0MW. Germany became the largest market for the Company, accounting for
29% of total revenue in the fourth quarter of 2012. Italy was the second
largest market in the fourth quarter, contributing 12.3 % of total revenue,
followed by France contributing 11.2% of total revenue. Other markets,
including UK and Japan, also generated notable revenue contribution increases
during the quarter, as the Company continues to expand its global customer
footprint and balance its revenue mix across greater markets and geographies.

Gross Profit / Loss and Gross Margin

Gross losses for the fourth quarter were US$2.0 million, and gross margin was
negative 3.7%, compared to gross margin of 0.7% for the third quarter of 2012.
Gross losses for full year 2012 were US$1.2 million, and gross margin was
negative 0.4%. This is mainly attributable to fast declining ASPs over the
year.Excluding the inventory provision of US$1.2 million, Non-GAAP gross
losses were US$0.8 million, and Non-GAAP gross margin was negative 1.5% in the
fourth quarter of 2012.

ASP

Module ASP for the fourth quarter was US$0.64 per watt, which was seven cents
or 9.9% lower than that of the last quarter. Module ASP in 2012 was US$0.74
per watt, compared to US$1.36 in the prior year. The lowered ASP was primarily
caused by an imbalance of supply and demand and, to a lesser extent,
decreasing raw material prices.

Costs

Blended wafer costs in the fourth quarter of 2012 were US$0.23 per watt, which
was four cents or 14.8% lower than those of the last quarter. Conversion costs
of cells and modules manufactured in the fourth quarter of 2012 were US$0.15
and US$0.20 per watt, respectively, a sequential improvement of 11.8% and
13.0%, respectively, from the third quarter of 2012.The cell conversion cost
of $0.15 and module conversion cost of US$0.20 both met the Company's year-end
target.

Operating Expense, Operating Profit/Loss and Net Income/Loss

Operating expenses increased to US$40.3 million in the fourth quarter of 2012,
from US$28.4 million in the third quarter of 2012. The increase in operating
expenses was primarily due to higher bad debt provision of US$26.1 million
recorded in the fourth quarter of 2012, compared to US$12.3 million bad debt
provision recorded in the third quarter of 2012.

Losses from operations increased to US$42.4 million in the fourth quarter of
2012, and to US$105.7 million for full year 2012.

The Non-GAAP loss from operations was US$15.0million in the fourth quarter and
US$59.2million for the full year 2012.

Correspondingly, net loss was US$70.5 million for the fourth quarter of 2012
and US$133.6 million for 2012. Non-GAAP losses were US$43.2 million for the
fourth quarter of 2012, and US$87.0million for the full year 2012.

Inventory

Inventories at the end of the fourth quarter of 2012 totaled US$83.9 million,
an increase of US$27.8 million from the prior quarter. The increase of
inventories in fourth quarter was primarily due to the forthcoming shipment
requirement in early 2013, advance purchases in anticipation of higher spot
prices in January 2013. The Company strives to maintain an optimal inventory
level and continues to diligently monitor and balance its inventories.

Cash and Cash Flow

As of December 31, 2012, the Company had cash and cash equivalents of US$183.3
million, and restricted cash of US$226.6 million. Operating cash outflow for
the fourth quarter of 2012 increased to US$41.1 million, from US$3.6 million
in the third quarter of 2012, primarily due to increased inventories. Total
operating cash outflows for year 2012 were US$15.6 million.

Capital Expenditures

Capital expenditures in the fourth quarter of 2012 were US$16.0 million, as
the Company, in its pursuit to producing ever more efficient QSAR products,
continues to expand its R&D Center. The construction of the R&D Center
expansion is expected to be completed and operational within the second
quarter of 2013. Capital expenditures for full year 2012 were US$44.3million.

Additional Company Updates Subsequent to Fourth Quarter 2012

  oChina Sunergy's first shipment to Malaysia: the Company has signed its
    first solar module contract with Pekat Solar Sdn Bhd, a leading local
    engineering, procurement and construction company in Malaysia, a
    subsidiary of Pekat Teknologi Sdn Bhd. The 343KW shipment has been
    completed in February 2013.
  oChina Sunergy Attended PV Expo 2013 in Tokyo: the Company attended the 6th
    International Photovoltaic Power Generation Expo in Tokyo, Japan between
    February 27 and March 1, 2013. The Company also displayed its latest QSAR
    II module and latest high efficiency poly module Waratah, with a highest
    output of 270w and 260w on a 60 pieces basis at the exhibition.

Business Outlook

Mr. Cai continued, "In early 2013, we saw the overall global market began to
rationalize in terms of supply and demand as well as pricing.Also, we
witnessed that selective markets such as China and Japan are improving, and as
such we will continue to target opportunities in these growing markets while
diligently managing our cash position.However, the oversupply in the global
solar market will likely persist through the year."

For the first quarter of 2013, the Company estimates that total shipments will
range between 100MW to 110MW. Gross margin for the first quarter of 2013 is
expected to remain at the similar level of that in the fourth quarter of 2012,
based on the average Euro-US dollar exchange rate in March.

For the full year 2013, the Company estimates that total shipments will range
between 550MW to 600MW, of which approximately 20% will come from projects.

This guidance is based on the current market conditions and reflects the
Company's current and preliminary estimates of market and operating conditions
and customer demand, which are all subject to change.

Conference Call

China Sunergy's management will host an earnings conference call on Friday,
April 12, 2013 at 8:00 a.m. Eastern Time (Friday, April 12, 2013 at 8:00 p.m.
Beijing/Hong Kong time). The management team will be on the call to discuss
financial highlights of the fourth quarter and full year 2012, provide
business outlook and answer questions.

To access the conference call, please dial:

United States toll-free: +1 866 519 4004
International:           +65 6723 9381
Singapore:               +65 6723 9381
China:                   800 819 0121 (Domestic) /400 620 8038 (Domestic
                         Mobile)
Hong Kong:               +852 2475 0994

Please ask to be connected to Fourth Quarter and Full Year 2012 China Sunergy
Co., Ltd. Earnings Conference Call and provide the following passcode:
17057096.

China Sunergy will also broadcast a live audio webcast of the conference call.
The webcast will be available by visiting the "Investor Relations" section of
the company's web site at http://www.chinasunergy.com.

Following the earnings conference call, an archive of the call will be
available by dialing:

United States toll-free: +1 855 452 5696
International:           +61 2 8199 0299

The passcode for replay participants is: 17057096. The telephone replay also
will be archived on the "Investor Relations" section of the company's website
for seven days following the earnings announcement.

About China Sunergy Co., Ltd.

China Sunergy Co., Ltd. (NASDAQ:CSUN) designs, manufactures and delivers high
efficiency solar cells and modules to the world from its production centers
based in China and Turkey. China Sunergy also invests in high potential solar
projects. Founded in 2004, China Sunergy is well known for its advanced solar
cell technology, reliable product quality, and excellent customer service.

For more information, please visit http://www.chinasunergy.com.

Investor and Media Contacts:

China Sunergy Co., Ltd.

Elaine Li
Phone: + 86 25 5276 6696
Email: Elaine.li@chinasunergy.com

Asia Bridge Group Limited

Wendy Sun
Phone: + 86 10 8556 9033
Email: wendy.sun@asiabridgegroup.com

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. All statements other than statements of historical facts in this
announcement are forward-looking statements. These forward-looking statements
are based on current expectations, assumptions, estimates and projections
about the Company and the industry, and involve known and unknown risks and
uncertainties, including but not limited to, the Company's ability to raise
additional capital to finance the Company's activities; the Company's
customers' financial condition and creditworthiness, and their ability to
settle accounts receivables; the effectiveness, profitability, and the
marketability of its products; litigations and other legal proceedings,
including any decisions by the US International Trade Committee and Department
of Commerce on the petitions filed; the economic slowdown in China and
elsewhere and its impact on the Company's operations; demand for and selling
prices of the Company's products, execution of our strategy to expand into
downstream solar power businesses, the future trading of the common stock of
the Company; the ability of the Company to operate as a public company; the
period of time for which its current liquidity will enable the Company to fund
its operations; the Company's ability to protect its proprietary information;
general economic and business conditions; the volatility of the Company's
operating results and financial condition; the Company's ability to attract or
retain qualified senior management personnel and research and development
staff; future shortage or availability of the supply of raw materials; impact
on cost-competitiveness as a result of entering into long-term arrangements
with raw material suppliers and other risks detailed in the Company's filings
with the Securities and Exchange Commission. The Company undertakes no
obligation to update forward-looking statements to reflect subsequent
occurring events or circumstances, or to changes in its expectations, except
as may be required by law. Although the Company believes that the expectations
expressed in these forward looking statements are reasonable, it cannot assure
you that its expectations will turn out to be correct, and investors are
cautioned that actual results may differ materially from the anticipated
results.

The following financial information is extracted from the Company's condensed
consolidated financial statements for the respective periods.

China Sunergy Co., Ltd.
Unaudited Condensed Consolidated Income Statement Information
(In US$ '000, except ADS and per ADS data)
                                 For the 3 months ended
                                 Dec31,2012      Sep30,2012   Dec31,2011
Sales to third parties           54,258            58,024         109,770
Sales to related parties         130               1,458          1,050
Total sales                      54,388            59,482         110,820
Cost of goods sold               (56,416)          (59,090)       (110,581)
Gross profit                     (2,028)           392            239
Operating expenses:
Selling expenses                 (5,464)           (5,403)        (5,756)
General and administrative       (33,146)          (20,772)       (31,109)
expenses
Research and development         (1,724)           (2,270)        (2,245)
expenses
Total operating expenses         (40,334)          (28,445)       (39,110)
Income(loss) from operations     (42,362)          (28,053)       (38,871)
Interest expense                 (7,203)           (7,334)        (9,494)
Interest income                  1,274             2,098          334
Other income/(expenses), net     2,569             8,043          (7,209)
Changes in fair value of         (371)             2              370
derivatives
Income(loss) before income tax   (46,093)          (25,244)       (54,870)
Income tax benefit(expense)      (24,444)          2,022          5,274
Net income(loss)                 (70,537)          (23,222)       (49,596)
Less: non-controlling interest   (13)              -              -
Net income (loss) attributable   (70,524)          (23,222)       (49,596)
to ordinary shareholders
Net income (loss) attributable
to ordinary shareholders per ADS
Basic                            ($5.27)           ($1.74)        ($3.71)
Diluted                          ($5.27)           ($1.74)        ($3.71)
Weighted average ADS outstanding
Basic                            13,372,292        13,372,292     13,372,292
Diluted                          13,372,292        13,372,292     13,372,292
                                 For the year ended December 31,
                                 2012              2011
Sales to third parties           286,889           556,122
Sales to related parties         5,832             10,170
Total sales                      292,721           566,292
Cost of goods sold               (293,914)         (564,474)
Gross profit                     (1,193)           1,818
Operating expenses:
Selling expenses                 (20,056)          (19,149)
General and administrative       (75,875)          (55,989)
expenses
Research and development         (8,609)           (6,718)
expenses
Total operating expenses         (104,540)         (81,856)
Income(loss) from operations     (105,733)         (80,038)
Interest expense                 (28,838)          (23,458)
Interest income                  6,155             2,505
Other income/(expenses), net     11,487            (1,900)
Changes in fair value of         (370)             (5,174)
derivatives
Income(loss) before income tax   (117,299)         (108,065)
Income tax benefit(expense)      (16,295)          13,772
Net income(loss)                 (133,594)         (94,293)
Less: non-controlling interest   (13)              -
Net income (loss) attributable   (133,581)         (94,293)
to ordinary shareholders
Net income(loss) attributable to
ordinary shareholders per ADS
Basic                            ($9.99)           ($7.05)
Diluted                          ($9.99)           ($7.05)
Weighted average ADS outstanding
Basic                            13,372,292        13,372,292
Diluted                          13,372,292        13,372,292



China Sunergy Co., Ltd
Unaudited Condensed Consolidated Balance Sheet Information
(In US$ '000, except share data)
                                                    Dec31,2012  Dec31,2011
Assets
Current Assets
Cash and cash equivalents                           183,312       209,479
Restricted cash                                     226,611       84,435
Accounts receivable, net                            77,189        152,286
Other receivable, net                               26,575        46,646
Project assets                                      4,761         9,204
Income tax receivable                               -             2,604
Inventories, net                                    83,856        43,978
 Advance to suppliers, net                       5,320         5,419
 Amount due from related parties                 67,007        634
 Current deferred tax assets                     1,727         6,416
 Restricted cash-collateral account              2,097         -
 Other current assets                            16            249
Total current assets                                678,471       561,350
Property, plant and equipment, net                  205,707       164,535
Prepaid land use rights                             28,547        23,360
Deferred tax assets                                 5,455         17,598
Intangible assets                                   1,987         4,839
Restricted cash-collateral account                  -             1,654
Amount due from related parties-non current         -             29,622
Other long-term assets                              2,918         6,951
Total assets                                        923,085       809,909
Liabilities and equity
Current liabilities
Short-term bank borrowings                          512,419       322,216
Accounts payable                                    128,347       47,720
Notes payable                                       38,496        56,206
Accrued expenses and other current liabilities     17,400        14,037
Income tax payable                                  338           -
Amount due to related parties                       70,582        57,610
Collateral account payable                         2,097         -
Convertible bond payable                          1,500         -
Current defered tax libility                        519           786
Total current liabilities                           771,698       498,575
Collateral account payable                          -             1,654
Convertible bond payable                            -             27,500
Long-term debt                                      122,859       125,439
Accrued warranty costs                              17,164        14,763
Other liabilities                                   5,044         2,891
Total liabilities                                   916,765       670,822
Equity:
Ordinary shares: US$0.0001 par value;
267,287,253shares issued outstanding as of         27            27
September 30, 2012 and December 31, 2011.
Additional paid-in capital                          185,367       185,367
Accumulated profit(deficit)                         (214,587)     (81,006)
Accumulated other comprehensive income              35,523        34,699
Total equity attributable to China Sunergy Co. Ltd. 6,330         139,087
Non-controlling interests                           (10)          -
Total equity                                       6,320         139,087
Total liabilities and equity                        923,085       809,909



Reconciliation of non-GAAP results of operations measures to the nearest
comparable
GAAP measures
                                  For the 3 months ended
                                  Dec31,2012     Sep30,2012   Dec31,2011
GAAP Net loss attributable to     (70,524)         (23,222)       (49,596)
ordinary shareholders
Inventory Write Down              1,239            1,279          (26,074)
Bad Debts provision               26,124           12,320         9,364
Impairment Goodwill loss          -                -              14,807
Non-GAAP Net loss attributable to (43,161)         (9,623)        (51,499)
ordinary shareholders
Non-GAAP Net loss attributable to
ordinary shareholders per ADS
Basic                             ($3.23)          ($0.72)        ($3.85)
Diluted                           ($3.23)          ($0.72)        ($3.85)
Weighted average ADS outstanding
Basic                             13,372,292       13,372,292     13,372,292
Diluted                           13,372,292       13,372,292     13,372,292
                                  For the year ended December 31
                                  2012             2011
GAAP Net loss attributable to     (133,581)        (94,293)
ordinary shareholders
Inventory Write Down              (840)            5,226
Bad Debts provision               47,401           12,267
Impairment Goodwill loss          -                14,807
Non-GAAP Net loss attributable to (87,020)         (61,993)
ordinary shareholders
Non-GAAP Net loss attributable to
ordinary shareholders per ADS
Basic                             ($6.51)          ($4.64)
Diluted                           ($6.51)          ($4.64)
Weighted average ADS outstanding
Basic                             13,372,292       13,372,292
Diluted                           13,372,292       13,372,292



SOURCE China Sunergy Co., Ltd.

Website: http://www.chinasunergy.com
 
Press spacebar to pause and continue. Press esc to stop.