Suntech Power Holdings Co. (STP), the solar panel maker probing what it calls a $699 million accounting fraud, reduced its forecast for shipments this year as increasing competition drove down prices for its products.
The Chinese manufacturer expects to ship 1.8 gigawatts to 2 gigawatts of photovoltaic panels, down from its previous forecast of 2.1 gigawatts to 2.5 gigawatts, according to a statement today.
The company based in Wuxi, China, said its statement reflected “preliminary” and “unaudited” results for the second quarter. The full report will be delayed until after the company completes an investigation into a fraud involving a 554.2 million euro ($699 million) financing guarantee it provided to an affiliated company. The July 30 disclosure sparked concerns about Suntech’s increasing debt burden.
“We are continuing to pursue a number of options to refinance our 2013 convertible notes and intend to address this issue in the near future,” David King, Suntech’s chief executive officer, said in the statement.
The report didn’t include net income or debt figures for the second quarter. Suntech said revenue was $471 million, down 43 percent from $830.7 million a year earlier. Shipments rose 33 percent from the first quarter, more than an earlier forecast of a 20 percent gain.
Suntech shares fell 2.2 percent to 88 cents at the close in New York.
Suntech reported a $76 million inventory provision that reduced its gross margin to minus 10 percent in the second quarter (STP). Operating expenses were $133 million in the quarter, including a $56 million provision related to the prepayment of a long-term supply contract that the company is disputing.
“Demand from European markets, China, Japan and Australia drove sequential shipment growth,” King said. “The global imbalance between supply and demand and the challenging price environment continue to impede profitability.”