China Sunergy Co., Ltd. (CSUN)
Q3 2012 Earnings Call
November 27, 2012 8:00 a.m. ET
Elaine Li – Senior IR
Stephen Cai – CEO
Yongfei Chen – CFO
James Medvedeff - Cowen & Company
Previous Statements by CSUN
» China Sunergy's CEO Discusses Q2 2012 Results - Earnings Call Transcript
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Thank you, operator and welcome to China Sunergy’s third quarter 2012 earnings conference call. This is Elaine Li speaking, China Sunergy’s Senior Investor Relations Manager. Apologize first for the delay. As you know we cannot start the call until the press release is being distributed. Once again, we are really sorry about the waiting. We have posted a presentation for this call on our website. Today we’ll be closely following and referring to that presentation in our prepared remarks. The company’s CEO Mr. Stephen Cai and our CFO, Mr. Yongfei Chen are here with us today.
Today, before the market opened, the company issued a press release announcing our third quarter financial results and our guidance for the fourth quarter of 2012. This press release is also available on the Investors section of China Sunergy’s website at www.chinasunergy.com.
To start, Stephen will present an overview of the third quarter results and the important developments that have taken place in the quarter. And then our CFO, Mr. Chen, will explain our financial results in more detail. Following that, Stephen will give a technology update and then close with Q4 guidance. Afterwards, they will all be available to take questions.
Before I turn the call over to Stephen, may I remind our listeners that management-prepared remarks include forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. And as such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. China Sunergy does not undertake any obligation to update any forward-looking statements, except as required under applicable law. As a reminder, this conference is being recorded.
Now, I’d like to turn the call over to CEO, Mr. Stephen Cai. Stephen?
Thank you all for joining today’s conference call again. At the end of November with only another month to go toward the end of this year, it’s clear that solar industry has gone through the toughest year in this industry. We have seen a massive oversupply of the solar panels, continuously dropping ASP and a slowing global demand. In major European markets, large incentives were pulled back by government entities and the trade disputes in the U.S. and EU have worried the industry. All this resulted in a very challenging market environment for all solar companies in 2012.
China Sunergy is cautiously confident that we have adjusted our strategies appropriately to endure. We believe that this company’s business model is sustainable and we are well positioned to benefit from the industrial eventual recovery. In our view through core strategies of China Sunergy to ensure our long term competitiveness in the solar industry are: One, to continuously advance in technology and the production efficiency, and two, moving forward into launching (ph) the products business.
Along these two strategic lines our current operational priorities include: first, diversifying our geographical focus from traditional European market to fast growing ones, including the U.S. Second, moving part of our manufacturing bases to overseas to better serve our global customers and hedge the risks brought up by trade dispute. And third, continuously bringing down the production costs. We will talk about these in more detail in the later part of my presentation.
As expected previously, this quarter’s revenue and the shipments are lower than those reported in the second quarter due to weaker market demand and deliberately going after only the financially strong customers. In the quarter, we generated revenues of $59.5 million and shipped a total of 82.5 megawatts in line with our guidance.
Our ASP was slightly lower to $0.71 per watt this quarter from $0.75 in the previous quarter. This quarter we successfully achieved a better geographical diversification with a revenue contribution from the Europe declining to 63% from the 82% in the second quarter. In particular, we have lowered our exposure to Italy this quarter and we plan to continue such policy over the next couple of quarters.
We have seen a strong pickup in revenue contribution from Asia Pacific region this quarter, specifically from Australia and Japan. Australia has become our largest end market for the first time accounting for 26% of our overall revenue in the third quarter and we expect this country to remain one of our most critical markets next year. On our future market prospects, in addition to Australia we believe that China, U.S., Japan, UK, Germany, France and Turkey will be important solar markets for China Sunergy in 2013. Japan in particular has become one of the most promising solar markets for global vendors and offers attractive returns, especially after the new solar incentive scheme announced in June this year.