Suntech Power Holdings Co., Ltd. (STP)
Q2 2008 Earnings Call Transcript
August 20, 2008 8.00 a.m. ET

Executives

Rory Macpherson - Investor Relations Director
Dr. Zhengrong Shi - Chairman and Chief Executive Officer
Dr. Stuart R. Wenham - Chief Technical Officer
Amy Yi Zhang - Chief Financial Officer, Director
Steven Chan - Chief Strategy Officer
Boxun Zhang - Financial Controller

Analysts

Jonathan Hoopes – ThinkEquity Partners
Sanjay Shrestha - Lazard Capital Markets
Brian Gamble - Simmons and Company
Mehdi Hosseini – FBR Capital Markets
Rob Stone - Cowen and Company
Paul Clegg - Jefferies & Company, Inc.
Lu Yeung - Merrill Lynch
Michael Carboy - Signal Hill Group
Adam Krop - Ardour Capital
Vishal Shah - Lehman Brothers
Angello Chan - Credit Suisse
Charles Yonts - CLSA
Jeff Osborne - Thomas Weisel Partners
Paul Leming - Soleil Securities.
Pavel Molchanov - Raymond James
Brian Yerger - Jesup & Lamont
Cheryl Tang - Goldman Sachs

Presentation

Operator

Good evening and thank you for standing by for Suntech’s second quarter 2008 earnings conference call. At this time, all participants are in listen-only mode. After management''s prepared remarks, there will be a question-and-answer session. Today''s conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today’s conference, Rory Macpherson, Suntech’s Director of Investor Relations. Please proceed.

Rory Macpherson

Hello everyone and welcome to Suntech’s second quarter 2008 earnings conference call. My name is Rory Macpherson, Suntech’s Investor Relations Director. From Suntech on the call today will be Dr. Zhengrong Shi, Suntech’s Chairman and CEO; Stuart Wenham, our Chief Technology Officer; and Amy Zhang, our Chief Financial Officer. Steven Chan, Suntech’s Chief Strategy Officer and Boxun Zhang, Suntech’s Director of Business and Financial Analysis will also participate in the Q&A following Dr. Shi’s closing remarks.

Before we continue, during this conference call we will make certain forward-looking statements in an effort to assist you in understanding the Company and its results. Forward-looking statements will be made under the Safe Harbor provisions of the U.S. Private Securities Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, Suntech’s future results may be materially different from the views expressed today.

A number of potential risks and uncertainties are outlined in our earnings release issued today and our SEC filings. Suntech does not undertake any obligation to update any forward-looking statements except as required under principle law.

As a reminder, this conference call is being recorded and a webcast of management’s prepared remarks will be available on the Investor Relations section of Suntech’s website after this call. Also, please make note that all figures mentioned during this conference call are in U.S. dollars.

I will now turn the call over to Suntech’s Chairman and CEO Dr. Zhengrong Shi.

Dr. Zhengrong Shi

Hello and thank you for joining us. We had a strong second quarter with total net revenues growing 51% year-over-year to $408.2 million, over $40 million above the top end of our guidance. The impressive revenue performance was due to higher shipments on back of internal capacity expansion and a greater silicon supply. We also increase margins due to stronger pricing under the appreciating Euro.

Non-GAAP EPS increased to $0.41 per diluted ADS due to our stronger performance in the first two quarters of this year and higher projections for the second half, we are raising our full year revenue guidance to a range of $2.05 billion to $2.15 billion and our PV product shipment target to approximately 550 MW. Today, I will give you an overview of the demands that we are seeing in our key markets and highlight the achievements we’ve made in expanding our world-class production facilities and securing reasonably priced silicon to meet our future production needs.

Suntech’s dedication to quality and our participation in numerous high profile projects has helped building a leading global brand and a strong brand equity with customers. In addition, over the past year we have substantially broadened our international reach through new sales offices in San Francisco, Germany, Spain, South Korea and Australia. In total, we now have offices in seven countries around the world and are planning additional offices in Greece, Italy and Switzerland. This has significantly enhanced our ability to provide on the growing support of our customers. It also means that we have the people and the infrastructure in place to rapidly adapt to the market changes. Our sales channel strategy leverages our strong look on knowledge and is tailored to suit individual market conditions.

Our key channels incorporate a leading International Distributor Network, direct project sales relations with multiple utilities and a growing dealer network in the U.S. Our flexibility to adopt and switch between these channels enables us to react quickly to change market conditions and minimize risk of countries specific policy changes.

During the second quarter, our European sales continued to thrive with approximately 26% of the revenue generated in Germany, 44% in Spain and a significant taxing in Italy and France. In the second half of 2008, we will continue our strong sales of momentum and build our positions in the emerging markets. Sales to Spain will still be significant in the second half of 2008, and while the situation in 2009 has not been clarified, we are very positive about the long-term growth characteristics of Spain.