Suntech Reports Big Q4 and $3B in 2010 Revenue; Stock Rallies

Wall Street analysts will worry about the decrease in margins, but a move towards upstream integration with a wafer production facility acquisition might temper analyst worries. Guidance shows good growth in revenue and margins for 2011.

Fourth Quarter 2010 Highlights

• Total net revenues were $945.1 million in the fourth quarter of 2010, representing growth of 27.1% sequentially and 61.9% year-over-year.
• Total PV shipments increased 19.8% sequentially and 87.3% year-over-year.
• Consolidated gross profit margin was 16.2% in the fourth quarter of 2010.

Full Year 2010 Financial Highlights

• Total net revenues were $2,901.9 million in 2010, representing 71.4 percent growth year-over-year.
• Total PV shipments were 1,572 megawatts, representing 124.5% growth year-over-year.
• Consolidated gross profit margin was 17.4%.
• Suntech achieved 1.8 gigawatts of PV cell and module capacity, and 500 megawatts of silicon ingot and wafer capacity as of December 31, 2010.

Other 2010 Highlights

• Suntech was selected to supply a 150 megawatt (AC) project for Sempra Generation. We covered that 800,000 panel order win here. 
• The firm closed its acquisition of a wafer production facility. In the fourth quarter, Suntech had $24 million in equity income from the wafer business.  
• Suntech signed a framework agreement with Siemens Energy.  Siemens has a pipeline to develop 80 megawatts of PV plants in six different countries.

Business Outlook

• In the first quarter of 2011, Suntech looks for PV shipments to be relatively flat compared with the fourth quarter of 2010.
• Due to the integration of wafer manufacturing capacity, consolidated gross margin in the first quarter of 2011 is expected to increase to approximately 20 percent.
• For the 2011 fiscal year, Suntech expects to ship at least 2.2 gigawatts of solar products and generate revenues of $3.4 billion to $3.6 billion.
• Consolidated gross margin for the full year 2011 is expected to be approximately 20 percent to 22 percent.
• Suntech expects to achieve 2.4 gigawatts of installed cell and module production capacity by the end of 2011. 

Suntech shares rose to $9.60 in extended trade after closing at $9 on the New York Stock Exchange.

A Note on Margins

Here's the margin picture for Suntech over the past few years:

Here's a margin snapshot for Suntech and some of its sector and industry peers and direct competitors from December 2010.  Source: Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months.