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China Sunergy Announces First Quarter 2013 Financial Results



         China Sunergy Announces First Quarter 2013 Financial Results

Company Grew Revenue by 13.4% Sequentially

Increased Total Shipment by 30.7% Sequentially

PR Newswire

NANJING, China, July 1, 2013

NANJING, China, July 1, 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 first quarter
ended March 31, 2013.

Mr. Stephen Cai, CEO of China Sunergy, commented, "We are pleased that despite
the industry's persistent oversupply, the Company was able to grow revenue and
returned to positive gross margin in the first quarter.  We continued our
geographic diversification, and took further steps to reduce operating
expenses. As we focus on profitability for the remainder of 2013, we remain
optimistic in the solar industry and confident in our Company's future."

First Quarter 2013 Financial Highlights

  o Total revenue was US$61.7 million, an increase of 13.4% from US$54.4
    million in the fourth quarter of 2012.
  o Shipments totaled 102.5MW, an increase of 30.7% (24.1MW) from 78.4MW in
    the fourth quarter of 2012.  Module shipments were 98.3MW, or 95.9% of
    total shipments.
  o Average selling price ("ASP") for the Company's solar modules was US$0.59
    per watt, a 7.8% decrease from that of the fourth quarter of 2012.
  o Conversion costs for cells increased 6.7% sequentially to US$0.16 per
    watt, from US$0.15 in the fourth quarter of 2012, due to the slightly
    decreased production volume in the quarter. Conversion cost for modules
    was US$0.20 per watt, remaining flat quarter-over-quarter.
  o Gross profit was US$0.3 million, and gross margin was 0.4%, compared with
    gross losses of US$2.0 million and gross margin of negative 3.7% in the
    fourth quarter of 2012. Non-GAAP^^[1]gross profit was approximately US$0.6
    million, and Non-GAAP gross margin was 1.0%.
  o Net loss attributable to ordinary shareholders improved to US$22.9million,
    from US$70.5 million a quarter ago. Non-GAAP net loss attributable to
    ordinary shareholders was US$22.3 million.
  o Net loss attributable to ordinary shareholders per ADS improved to
    US$1.71, compared to net loss per ADS of US$5.27 in the fourth quarter of
    2012. Non-GAAP net loss attributable to ordinary shareholders per ADS was
    US$1.67.
  o Operating cash outflow was US$41.7 million, compared to cash outflow of
    US$41.1 million in the fourth quarter of 2012.
  o Cash, cash equivalents and restricted cash totaled US$305.5 million, as of
    March 31, 2013.

[1] China Sunergy's Non-GAAP financial measures are its corresponding GAAP
financial measures as adjusted by excluding costs related to certain 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.

First Quarter 2013 Financial Review

Total Revenue and Shipments

For the first quarter of 2013, total revenue was US$61.7 million, an increase
of 13.4% from the fourth quarter of 2012, primarily due to higher shipments
and partially offset by the lower ASP.

Total shipments for the first quarter of 2013 were 102.5MW. France became the
largest market for the Company, accounting for 25.6% of total revenue in the
first quarter of 2013. Germany was the second largest market in the first
quarter, contributing 16.7% of total revenue, followed by India and Japan,
contributing 14.5% and 12.5% of total revenue, respectively.

Gross Profit and Gross Margin

Gross profit for the first quarter was US$0.3 million, and gross margin turned
positive to 0.4%, compared to gross margin of negative 3.7% for the fourth
quarter of 2012. Excluding the inventory provision of US$0.3 million, Non-GAAP
gross profit was US$0.6 million, and Non-GAAP gross margin was 1.0% in the
first quarter of 2013.

ASP

Module ASP for the first quarter was US$0.59 per watt, which was five cents or
7.8% lower than that of the last quarter. The lowered ASP was primarily caused
by an imbalance of supply and demand.

Costs

Blended wafer costs in the first quarter of 2013 were US$0.22 per watt, which
was one cent or 4.3% lower than those of the last quarter. Conversion costs of
cells and modules manufactured in the first quarter of 2013 were US$0.16 and
US$0.20 per watt, respectively.

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

Operating expenses decreased to US$15.2 million in the first quarter of 2013,
from US$40.3 million in the fourth quarter of 2012. The decrease in operating
expenses was mainly attributable to the decreased bad debt provision, from
US$26.1 million in the fourth quarter of 2012, to US$0.2 million in the first
quarter of 2013.

Loss from operations decreased to US$15.0 million in the first quarter of
2013, compared to US$42.4 million in the fourth quarter of 2012. The Non-GAAP
loss from operations was US$14.5 million in the first quarter of 2013 and
US$15.0 million a quarter ago.

Correspondingly, net loss attributable to ordinary shareholders was
US$22.9million and Non-GAAP net loss attributable to ordinary shareholders was
US$22.3 million for the first quarter of 2013.

Inventory

Inventories at the end of the first quarter of 2013 totaled US$69.1 million, a
decrease of US$14.8 million from the prior quarter, driven by higher shipment
and optimized production control. The Company strives to maintain an optimal
inventory level and continues to diligently monitor and balance its
inventories.

Cash and Cash Flow

As of March 31, 2013, the Company had cash and cash equivalents of US$102.3
million, and restricted cash of US$203.2 million. Operating cash outflow for
the first quarter of 2013 increased to US$41.7 million, from US$41.1 million
in the fourth quarter of 2012, primarily due to increased investment in solar
projects and repayment of account payables.

Capital Expenditures

Capital expenditures in the first quarter of 2013 were US$18.7 million, as the
Company continues to expand its R&D Center. The construction of the R&D Center
expansion is expected to be completed and operational in the second half of
2013.

Additional Company Updates Subsequent to First Quarter 2013

  o China Sunergy Attended 2013 SNEC 7th PV Power Expo in Shanghai, China, and
    Introduced New 1500V Module: the Company attended the SNEC 7th (2013)
    International Photovoltaic Power Generation Conference and Exhibition
    ("SNEC Expo") from May 13 to May 16, 2013 in Shanghai, China. The Company
    showcased new 1500V module, and exhibited its QSAR II270-60M module,
    Waratah 260-60P Poly module and double glass Poly module.
  o Turkey Plant Officially Begun to Accept Bulk Orders: the Company had
    signed a 2MW solar module supply contract for distributed roof-top
    projects in the Netherlands with Oskomera Solar Power Solutions B.V.
    (OSPS), one of the leading PV-system integrator for large scale
    photovoltaic (PV) projects, wholesales and high volume realization of
    residential systems in Europe.   The company has shipped the first batch
    in June and will complete the remainder in July  from its Turkey plant,
    which not only enables to meet the restricted delivery deadline, but also
    mitigate the provisional anti-dumping tariffs imposed by EU.
  o China Sunergy Starts to Ship from Turkey Plant: the Company began shipping
    solar modules from its plant in Istanbul, Turkey, and will deliver a total
    of approximately 6.4MW from mid-June to August 2013 to a well-known French
    customer. China Sunergy currently has a total production capacity of 100MW
    in solar cells and 300MW in solar modules at its Turkey facility. Being
    the Company's second largest production base, the plant will enhance the
    Company's global production chain and efficiently serve customers across
    Europe and globally.
  o China Sunergy Received Approval for Construction of 40MW Solar Project in
    Xinjiang Autonomous Region, China in June: the Company's wholly-owned
    subsidiary, Hami Huiteng Solar Power Co., Ltd, has received approval from
    Xinjiang subordinate of the National Development and Reform Commission for
    the construction of a 40MW solar project located in Hami city, Xinjiang
    Autonomous Region, China. The project will be constructed in two phases of
    20MW each and will be equipped with China Sunergy's high efficient poly
    modules.
  o Correction of Clerical Errors. The company's annual report on the Form
    20-F filed with the SEC on April 26, 2013 ("20F") disclosed that CSUN
    Trading (Hong Kong) Co., Limited ("CSUN Trading"), was wholly owned by
    China Sunergy (Hong Kong) Co., Limited.("Sunergy Hong Kong"), and China
    Sunergy (Nanjing) Co., Ltd. ("Sunergy Nanjing") and Sunergy Hong Kong held
    70% and 30% equity interest of China Sunergy (Yangzhou) Co., Ltd.("Sunergy
    Yangzhou"), respectively, as of April 26, 2013. The above disclosures are
    clerical errors. CSUN Trading has become a company with 80% and 20% equity
    interest held by Sunergy Hong Kong and Sunergy Nanjing, respectively,
    since September 2012. Sunergy Nanjing and Sunergy Hong Kong held 30% and
    70% equity interest of Sunergy Yangzhou, respectively, as of April 26,
    2013, which remains unchanged as of today.

Business Outlook

Mr. Cai continued, "In light of the current market environment, we have
determined that revenue growth, while desirable, is not our highest priority
at this time. For the rest of 2013, we will continue to seek downstream
opportunities and disciplined expansions in emerging markets.  In addition, we
are moving more production capacity to our Turkey plant, which will require
time to reach full utilization. As a result, we made a decision to
strategically lower our shipment outlook in 2013, while we aim to achieve
higher gross margin and return to earning positive net income."

For the second quarter of 2013, the Company estimates that total shipments
will range between 100MW to 110MW. Gross margin for the second quarter of 2013
is expected to reach high single-digit level, based on the average Euro-US
dollar exchange rate in June.

For the full year 2013, the Company lowers its total shipment estimates to
range between 500MW to 550MW, compared to the previous estimated range of
between 550MW to 600MW.

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 Monday,
July 1, 2013 at 8:00 a.m. Eastern Time (Monday, July 1, 2013 at 8:00 p.m.
Beijing/Hong Kong time). The management team will be on the call to discuss
financial highlights of the first quarter 2013, 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 First Quarter 2013 China Sunergy Co., Ltd.
Earnings Conference Call and provide the following passcode: 84232027.

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.csun-solar.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: 84232027. 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.csun-solar.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 or renew existing bank borrowings as they become due 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
                                      Mar 31, 2013  Dec 31, 2012  Mar 31, 2012
Sales to third parties                60,855        54,258        67,663
Sales to related parties              843           130           804
Total sales                           61,698        54,388        68,467
Cost of goods sold                    (61,435)      (56,416)      (67,739)
Gross profit                          263           (2,028)       728
Operating expenses:
Selling expenses                      (5,756)       (5,464)       (4,339)
General and administrative expenses   (7,628)       (33,146)      (12,067)
Research and development expenses     (1,854)       (1,724)       (2,369)
Total operating expenses              (15,238)      (40,334)      (18,775)
Income(loss) from operations          (14,975)      (42,362)      (18,047)
Interest expense                      (7,454)       (7,203)       (6,384)
Interest income                       1,557         1,274         631
Other income/(expenses), net          (3,007)       2,569         11,262
Changes in fair value of derivatives  1,410         (371)
Income(loss) before income tax        (22,469)      (46,093)      (12,538)
Income tax benefit(expense)           (460)         (24,444)      2,985
Net income(loss)                      (22,929)      (70,537)      (9,553)
Less: non-controlling interest        (70)          (13)          -
Net income (loss) attributable to     (22,859)      (70,524)      (9,553)
ordinary shareholders
Net income (loss) attributable to
ordinary shareholders  per ADS
Basic                                 ($1.71)       ($5.27)       ($0.71)
Diluted                               ($1.71)       ($5.27)       ($0.71)
Weighted average ADS outstanding
Basic                                 13,372,292    13,372,292    13,372,292
Diluted                               13,372,292    13,372,292    13,372,292

 

China Sunergy Co., Ltd
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In US$ '000)
                                                                                                For the 3 months ended
                                                                                                Mar 31,   Dec 31,   Mar 31,
                                                                                                2013      2012      2012
 Net income (loss)                                                                              (22,929)  (70,537)  (9,553)
 Other comprehensive income                                                                     -         -         -
     Foreign currency translation adjustments,
     net of tax impact nil for the three months ended March 31, 2013, December 31, 2012 and     (1,015)   1,314     662
March 31, 2012
 Comprehensive income (loss)                                                                    (23,944)  (69,223)  (8,891)
 Less:                                                                                         
    Comprehensive loss attributable to noncontrolling interest                                  (70)      (13)      -
 Comprehensive income (loss) attributable to ordinary shareholders of China Sunergy Co., Ltd    (23,874)  (69,210)  (8,891)

 

China Sunergy Co., Ltd
Unaudited Condensed Consolidated Balance Sheet Information
(In US$ '000)
                                                     Mar 31, 2013 Dec 31, 2012
Assets
Current Assets
  Cash and cash equivalents                         102,293       183,312
  Restricted cash                                   203,181       226,611
  Accounts receivable, net                          70,696        77,189
  Other receivable, net                             25,911        26,575
  Project assets                                    17,891        4,761
  Inventories, net                                  69,093        83,856
    Advance to suppliers, net                       6,193         5,320
    Amount due from related parties                 89,645        67,007
    Current deferred tax assets                     1,391         1,727
    Restricted cash-collateral account              2,009         2,097
    Other current assets                            1,339         16
Total current assets                                589,642       678,471
Property, plant and equipment, net                  214,587       205,707
Prepaid land use rights                             28,383        28,547
Deferred tax assets                                 6,439         5,455
Intangible assets                                   1,271         1,987
Other long-term assets                              2,426         2,918
Total assets                                        842,748       923,085
Liabilities and equity
Current liabilities
Short-term bank borrowings                          501,110       512,419
Accounts payable                                    119,093       128,347
Notes payable                                       20,932        38,496
Accrued expenses and other current liabilities      24,666        17,400
Income tax payable                                  1,598         338
Amount due to related parties                       73,950        70,582
Collateral account payable                          2,009         2,097
Convertible bond  payable                           1,500         1,500
Current defered tax libility                        365           519
Total current liabilities                           745,223       771,698
Long-term debt                                      91,120        122,859
Accrued warranty costs                              17,857        17,164
Other liabilities                                   4,307         5,044
Total liabilities                                   858,507       916,765
Equity:
Ordinary shares: US$0.0001 par value; 267,287,253
shares issued outstanding as of  September 30, 2012 27            27
and December 31, 2011.
Additional paid-in capital                          187,225       185,367
Accumulated profit(deficit)                         (237,446)     (214,587)
Accumulated other comprehensive income              34,507        35,523
Total equity attributable to China Sunergy Co. Ltd. (15,687)      6,330
Non-controlling interests                           (72)          (10)
Total equity                                        (15,759)      6,320
Total liabilities and equity                        842,748       923,085

 

Reconciliation of Non-GAAP Results of Operations Measures to the Nearest
Comparable GAAP Measures
(In US$ '000)
                                                   For the 3 months ended
                                     Mar 31, 2013  Dec 31, 2012  Mar 31, 2012
GAAP Gross Profit                    263           (2,028)       728
Inventory Write Down                 354           1,239         4,025
Non-GAAP Gross Proft                 617           (789)         4,753
GAAP Net loss attributable to        (22,859)      (70,524)      (9,553)
ordinary shareholders
Inventory Write Down                 354           1,239         4,025
Bad Debts provision                  162           26,124        5,885
Non-GAAP Net loss attributable to    (22,343)      (43,161)      357
ordinary shareholders
Non-GAAP Net loss attributable to
ordinary shareholders per ADS
Basic                                ($1.67)       ($3.23)       $0.03
Diluted                              ($1.67)       ($3.23)       $0.03
Weighted average ADS outstanding
Basic                                13,372,292    13,372,292    13,372,292
Diluted                              13,372,292    13,372,292    13,372,292

SOURCE China Sunergy Co., Ltd.

Website: http://www.csun-solar.com
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