Suntech Power Holdings Co., the world’s largest solar company, confirmed its forecast for shipment volume and gross margins as peers cut theirs in response to falling prices and slower demand growth for panels.
Suntech expects shipments in the third quarter to increase by more than 15 percent from the second quarter, in line with its Aug. 22 forecast, and gross margin will be 13 percent, compared with the earlier forecast of 11 to 13 percent, the Wuxi, China-based company said today in a statement.
The company is the first among large solar manufacturers to release third-quarter figures or preliminary results without reducing its forecast, following recent cuts by China-based Yingli Green Energy Holding Co., Renesola Ltd. and China Sunergy Co., and U.S.-based SunPower Corp. and First Solar Inc. Reduced government incentive programs are slowing global demand growth for solar panels as a surge in Chinese manufacturing capacity boosts supply.
“Suntech appears to have outperformed its peers in the third quarter from a volume and gross margin perspective,” Dan Ries, an analyst at Collins Stewart LLC in New York said today in a report.
The company may not be able to sustain this performance, he said in the current quarter. “Unfortunately, the solar market’s fundamentals are currently deteriorating more rapidly than Suntech can improve its costs and expenses,” Ries said.
“Coming quarters will be challenging,” due to excess supply and volatile macroeconomic conditions, Suntech Chairman and Chief Executive Officer Zhengrong Shi said in the statement.
The company expects to reduce operating expenses by at least 20 percent next year and improve working capital by $200 million by then end of this year.
Suntech fell 6.1 percent to $2.60 in New York. The shares have dropped 68 percent this year.