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China Sunergy Co., Ltd. (CSUN)
Q2 2009 Earnings Call
August 27, 2009 8:00 am ET
Allen Wang - CEO
Richard Gu - VP, Sales and Marketing
Randy Law - Head of IR
Peter Schmidt - Financial Dynamics
Lu Yeung - Bank of America/Merrill Lynch
Paul Clegg - Jefferies
Robert Stone - Cowen & Co.
Pranab Sarmah - Daiwa Securities
Arch Pei - JLM Pacific Epoch
Rafi Hassan - FBR
Arthur Freidman - Freidman Asset Management
Welcome to the second quarter 2009 China Sunergy Company Limited Earnings Call. (Operator Instructions)
I would now like to turn the presentation over to your host for today’s call Mr. Peter Schmidt from FD. Please proceed.
Previous Statements by CSUN
» China Sunergy Q3 2009 Earnings Call Transcript
» China Sunergy Co., Ltd. Q1 2009 Earnings Call Transcript
» China Sunergy Co., Ltd. Q3 2008 Earnings Call Transcript
Forward-looking statements involve inherent risk and uncertainties 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 expect as required under applicable law. As a remainder this conference is being recorded.
With that, I'd like to introduce Allen Wang, the CEO of China Sunergy. Allen?
Thank you Peter and welcome everyone to our 2009 second quarter conference call. Joining me today is our Acting CFO, Mr. Guo; our CTO, Dr. Zhao; and the VP of Sales and Marketing, Mr. Richard Gu.
Towards the end of 2008, as the full extent of the financial situation became apparent, China Sunergy has quickly put in place measures to reduce the immediate impact on our operations and financial results while ensuring the potential for a strong recovery when the environment improves.
Although it was impossible to avoid the pressure put on our results during the past quarter, the steps we took at that time blunted the worst of the impact and have benefited China Sunergy over the past quarter.
Although the market recovery is not as substantive as we anticipated earlier in the year. I’m pleased that during the second quarter of 2009, we met or exceeded the financial and operational targets we set for ourselves.
China Sunergy's 41 megawatts of solar product shipment during the quarter slightly exceeds our 35 to 40 megawatt guidance, and our $70 million in revenue marked the increase of 89.5% compared to the first quarter of 2009. Through effective inventory management and cost controls, close customer relationship and a more stable pricing environment, gross margins recovered to 9.7% during the quarter, meaning that we return to profitability with enhanced profit of $1.7 million for the second quarter.
We experienced a steady monthly progress throughout the company, including our focus on future developments, existing and new market opportunities. We continue to move forward with our [impact] cell commercialization and so ongoing improvements across our solar cell products.
Although we realized the challenges that remain on the horizon, we have made important progress and have put in place effective measures that will contribute to our operational and financial performance. While we have seen some more rational price trends develop during the quarter, ASP continues to fall as downstream demand remains [feeble], by customers having difficulty with the financing of solar projects.
We continue our growth in pricing policies undertaken in the first quarter to take advantage of the demand that exists, and strengthened our relationship with our top tier clients. We are therefore able to reach terms with customers that are mutually beneficial for both parties, while maintaining the potential for future growth.
These clients remain geographically diverse and during the quarter we continued to expand our international business [progress], due to the planning of a framework agreement and a sales contract with an Italian solar module manufacturer, and a framework agreement and follow-on sales contract with downstream customer in South Korea.
Due to a [way] execute sale of internal strategies and the moderate recovery of the solar market, we returned to profitability during the quarter. However, as I will outline shortly, the sales environment has not fully recovered. Although we believe that China Sunergy has a greater market share now than a year ago as we are shipping more solar products within a smaller market. We must continue to work diligently to position ourselves for profitable growth with the still challenging marketplace.
I would now like to turn the call to Richard Gu, our VP of Sales and Marketing for a discussion of some important developments. We’ll then review our financial results before we discuss how we anticipate for the next few quarters.
Thank you, Allen. I would like to take a few minutes to update everyone on some recent channel development. Over the past quarters, we have worked hard to ensure that relationships between China Sunergy and our customers have grown stronger even as we explore new technologies and opportunities across various geographies.
We have expanded our client relationship and business development department to ensure our clients have the dedicated support they decide through sales cycle, and have continued to build out channel development.
We have more aggressively sought out additional US clients and look to open our US office during the fourth quarter. We maintained our European customer base while securing new clients including Renergies Italy by ramping up sales and services within our European office.
We made a progress with existing and potential clients in Asia, specifically Korea and Australia, and have submitted applications for 11 megawatts of future Chinese projects. Acting jointly with our related party, CEEG, we are working to secure an additional 20 megawatts of solar project.