Suntech Power Holdings Co. (STP, K3ND.SG) posted a larger second-quarter loss, despite jumps in revenue and shipments, as lower prices and higher costs hit the bottom line and the company cut its 2011 earnings forecast.
The China-based solar-panel manufacturing giant booked operating expenses of $204 million, up 44% from a year ago, with much of the cost tied to the termination of a supply contract with solar-wafer maker MEMC Electronic Materials Inc. (WFR) and a much smaller charge tied to discontinued operations at a German subsidiary.
Despite "challenging times" for the industry, Suntech plans to meet its goal of shipping 2.2 gigawatts of solar products this year, although the company cut its revenue view for the year to $3.2 billion to $3.4 billion, down 3% from its May outlook.
"There is no doubt we are entering through challenging times as an industry," Suntech Chief Financial Officer David King said during a conference call with analysts. But he added that Suntech is working to cut costs and debt.
Suntech also expects demand to pick up later this year in Germany and Italy, as well as China, said Chief Commercial Officer Andrew Beebe.
Suntech said it expects third-quarter solar-panel shipments to rise more than 15% compared with the second quarter.
Shares of Suntech were recently trading 3 cents lower at $5.07, erasing earlier gains.
Suntech has boosted manufacturing of silicon wafers - the key ingredient in solar cells that convert sunlight into electricity - to serve about half of its needs. Being able to make wafers in-house will save the company $400 million over the next five years, Chief Executive Shi Zhengrong said.
Suntech reported a loss of $259.5 million, or $1.44 an American depositary share, compared with a loss of $174.9 million, or 97 cents a share, a year earlier. Excluding items, Suntech reported a loss of 19 cents a share, compared with a year-earlier profit of 3 cents a share.
Revenue jumped 33% to $830.7 million.
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