Suntech, Trina Solar see demand rising; shares up

NEW YORK/LOS ANGELES (Reuters) - Chinese solar companies Suntech Power Holdings Co and Trina Solar Ltd posted higher-than-expected earnings on Thursday and said demand for the clean energy systems was rebounding after a dismal year.

Prices for the photovoltaic cells and modules that turn sunlight into electricity have plummeted by as much as 50 percent over the past 12 months because of a glut of production and difficulty in obtaining financing for new projects.

That price drop has helped spark demand, Suntech Chief Executive Officer Zhengrong Shi told a conference call, particularly in countries where solar developers were rushing to start projects before potential cuts to renewable energy incentives at the beginning of 2010.

Suntech raised its full-year forecast for shipments and said it expected them to rise by at least 10 percent in the fourth quarter from the third quarter. For 2010, shipments would rise at least 75 percent over 2009 levels, it said.

“This is the quarter where we really felt like Suntech has really emerged out of this consolidation, that was triggered by the financial crisis, relatively strong compared to many of its peer companies,” Suntech’s Chief Strategy Officer Steven Chan said in an interview.

Chan said the company is quite optimistic that it can reach its forecast for shipments to grow next year.

“That’s really backed by the visibility that we’ve gotten from our customers for shipments next year. It’s looking quite quite healthy in terms of the industry’s recovery,” Chan said.

The company, one of the world’s largest solar manufacturers, saw third-quarter earnings slump by 30 percent to $29.8 million from a year earlier as revenue fell 20 percent to $473.1 million.

Still, the profit of 16 cents per American Depository Share topped the 8 cents that analysts had forecast, and Suntech shares were up 4.8 percent in noon trading.

Suntech expects prices for its panels to fall 10 percent in the fourth quarter but forecast them to stabilize or rise slightly in the first quarter of 2010.

Chan attributed that to the fact that the industry has stabilized from a price point of view but also because customers are starting to prefer Suntech over other brands.


Trina said its shipments had nearly doubled to a record 123 megawatts in the third quarter, although the steep declines in prices had cut its revenues by 14 percent.

The company, which raised $142.5 million in a public stock offering in August, raised the low end of its full-year sales forecast to 380 MW from 350 MW while keeping the upper end at 400 MW.

Increasing global demand also prompted the company to increase its production capacity of cells and modules from 600 MW by end-2009 to between 850 MW and 950 MW by the end of 2010.

Trina’s earnings rose to $40.1 million, or $1.29 per ADS, easily topping the 76 cents per share that analysts had forecast, according to Thomson Reuters I/B/E/S.

Gross margin was 28.5 percent in the third quarter, up from 27.4 percent in the second quarter and 22.4 percent a year earlier.

Shares of Suntech were up 4.8 percent to $15.81 in noon trading on the New York Stock Exchange, while Trina climbed 2.9 percent to $43.99.

Reporting by Matt Daily and Laura Isensee in Los Angeles; Editing by Lisa Von Ahn and Tim Dobbyn