Like others in the industry, Suntech saw strong demand in Europe as developers rushed purchases ahead of cuts to renewable energy subsidies in key markets such as Germany and Italy.
The company's second-quarter results were in line with expectations, even though its gross profit margin in the second quarter slipped to 18.2 percent from 19.5 percent in the first quarter. Its margin may drop further in the third quarter, when the company forecast it to be in the mid-to-high-teens percentage range.
Suntech Chairman and Chief Executive Zhengrong Shi said average selling prices for its panels would "tick down slightly" in the third quarter, and that it was considering moving into the solar wafer business.
"It is neccesary for us to do some in-house wafering to maintain supply stability," Shi told a conference call. "We believe we should have cash to expand, but at this momenet we have options. We are evaluating it."
Suntech currently focuses on production of solar modules and cells, which are made from polysilicon wafers. By producing some of its own wafers it would gain greater control over the input costs of a key component.
Still, the expansion of its operations up the supply chain comes with risks, even though it could be a smart move, one analyst said.
"I think its a good thing that they are saying they wlll partially integrate, not fully integrate," said Gary Hsueh, analyst with Oppenheimer & Co.
"I think you've seen the companies who are vertically integrated ... are doing better," he added.
The company, the largest Chinese maker of photovoltaic equipment, reported a net loss of $174.9 million, or 97 cents per American depositary share, compared with a year-earlier profit of $10 million, or 6 cents per ADS.
The company had announced on August 6 that it would post a quarterly loss because of the charges to shut down its thin-film amorphous silicon operations in Shanghai and for a stake in Shunda Holdings Co,
Revenue rose 95 percent to $625.1 million.
Like many other solar manufacturers, Suntech suffered during the quarter from the weakness in the euro against the U.S. dollar, which cost it about $61.4 million.
Suntech hiked its 2010 shipment target to 1.5 gigawatts from 1.3 GW, which is more than double total shipments for 2009, as it expands its production capacity to 1.8 GW.
The company also said it signed supply agreements for large projects in Thailand, India and Israel, and remained on track to begin production in the United States in fourth quarter. (Reuters)
