SAN FRANCISCO and WUXI, China, NOV. 20 /PRNewswire/ -- Suntech Power Holdings Co., Ltd. (NYSE: STP), the world's largest photovoltaic (PV) module manufacturer, today announced financial results for the third quarter ended September 30, 2008.

    Third Quarter Highlights(1)
    -- Third quarter 2008 total net revenues grew 53.7% year-over-year to
       $594.4 million.
    -- On a consolidated basis, GAAP gross margin increased to 21.6% for the
       third quarter 2008 compared to 20.7% for the third quarter 2007.  Non-
       GAAP(2) gross margin reached 21.8% for the third quarter 2008, compared
       to 21.4% for the third quarter 2007.
    -- GAAP net income for the third quarter was $55.9 million or $0.33 per
       diluted American Depository Share (ADS).  On a non-GAAP basis,
       Suntech's net income for the third quarter was $60.3 million or
       $0.35 per diluted ADS.  Each ADS represents one ordinary share.
    -- Suntech's PV cell production capacity was 750MW at the end of the
       third quarter 2008.
    -- Due to the depreciation of the Euro versus the U.S. dollar combined
       with the impact of tighter credit markets, Suntech has revised its full
       year 2008 revenue guidance from a range of $2.05 billion to
       $2.15 billion to a new expected range of $1.85 billion to $1.87
       billion. Suntech has revised its full year 2008 PV product shipment
       target from 550MW to approximately 490MW.

'Our third quarter performance was driven by healthy demand for our solar products, resulting in strong top-line growth that exceeded the high end of our guidance,' said Dr. Zhengrong Shi, Suntech's Chairman and CEO. 'However, the rapid weakening of the Euro relative to the USD over the past two months combined with the unstable credit markets has created a challenging environment in the fourth quarter of 2008. This has resulted in a faster than expected sequential decline in sales prices and the deferment of some customer orders, which will significantly impact our profitability in the fourth quarter of 2008.'

'Due to these near-term challenges, we have been implementing a range of measures to prudently manage this temporary downturn. These include the minimization of cash outlays, renegotiation of high priced, short-term silicon contracts, optimization of our supply chain and production, and the enhancement of currency risk management. We believe that these steps will enable us to weather the short term market disturbances and we expect our profitability will steadily improve in 2009 as multiple long term, low cost silicon contracts initiate delivery.'

''In addition, we believe that the industry recalibration will benefit Suntech as we expect a flight to quality solar companies that are positioned to be long-term leaders in the solar industry,' continued Dr. Shi. ''Suntech's exceptional project history, dedication to innovation and focus on producing premium quality solar products differentiate Suntech's products and brand. Moreover, our localized customer service, broad product range and manufacturing scale provide a stable base to serve our customers' long-term needs. We are confident that our customers recognize the value in partnering with Suntech, and we expect to improve our market position in 2009.''

'Suntech's goal is to drive down the cost of solar to grid parity, and these macroeconomic changes should accelerate the reduction in silicon costs and sales prices and stimulate demand. In addition, the outlook for 2009 demand is encouraging. Although customers have deferred some orders in the fourth quarter, many are committing to increased volumes for 2009 indicative of customers' confidence that the financing environment will improve. We have already received orders for over 600MW of PV products for 2009 from our European customers and are pursuing a growing pipeline of additional orders.'

    Recent Business Highlights
    Acquisitions and Joint Venture Agreements
    -- Suntech acquired EI Solutions, a leading California-based commercial
       solar system integration company, to provide complete solar solutions
       to commercial, utility and government customers in the U.S.. Renamed
       Suntech Energy Solutions, it has designed and implemented solar
       projects for many leading US companies, including Google, Disney, Sony
       Pictures, The North Face, and Puget Sound Energy.
    -- Suntech established a joint venture with MMA Renewable Resources to
       create Gemini Solar Development Company (Gemini Solar), to develop and
       finance photovoltaic projects 10MW and larger. Gemini Solar will
       provide an end-to-end solution to address the growing demand for large-
       scale solar projects.
    Suntech Energy Solutions Projects
    -- Suntech Energy Solutions recently substantially completed numerous
       installations including:
       -- A distribution center for The North Face in Visalia, CA which
          included a 1MW installation of Suntech modules on tracking
          systems in a 5 acre retention pond abutting the facility.
       -- A 250kW rooftop installation for a carport at Caltech in
          Pasadena CA.
       -- A 250kW ground mounted tracking system for the luxury
          eco-resort Post Ranch Inn, in Big Sur, CA.
       -- A 100kW carport installation for The Venetian Hotel in Las Vegas,
          NV.
    Capital and Credit Facilities
    -- Suntech had cash and cash equivalents of $394.6 million, restricted
       cash of $124.1 million and short term investments of $145.6 million
       as of September 30, 2008. In addition, Suntech had value-added tax
       recoverable of $201.8 million at the end of September 30, 2008 of
       which approximately $126 million has been approved for refund by
       the P.R.C. government.
    -- Suntech had approximately $1.7 billion of approved credit lines to be
       used for fixed asset purchase, working capital or trade financing as of
       September 30, 2008. Of these credit facilities approximately $1.1
       billion had been drawn down as of September 30, 2008. During the fourth
       quarter, Suntech has secured a further $600 million of credit
       facilities, which can be utilized for fixed asset purchase, working
       capital or trade financing. Suntech expects that its capital will be
       sufficient to cover its capital expenditures in 2008 and 2009, while
       maintaining adequate working capital to support its operations.
    Technology
    -- Suntech is on track to expand Pluto PV cell production capacity
       from 10MW to 30MW by the end of 2008. During the temporary period
       of downturn, Suntech intends to accelerate retrofitting of existing
       lines to Pluto technology and achieve 100MW of Pluto PV cell
       capacity by the end of the first quarter 2009.
    Collaboration on Climate Change
    -- Suntech joined The Climate Group, a global independent organization
       dedicated to accelerating action on climate change.  Suntech is the
       first and only energy company to join The Climate Group. The
       Climate Group is an independent, nonprofit organization that works
       with government and business leaders to accelerate the transition
       to a low-carbon economy.
    Third Quarter 2008 Results

                                                    Non-GAAP      Non-GAAP
                           Net                       Gross         Gross
                         Revenues                    Profit        Margin
                           (in $       % of Net      (in $
                         millions)     Revenues     millions)        (%)
    Standard PV Modules    $523.1       88.0%       $122.2         23.4%
    Others                  $71.3       12.0%         $7.5         10.5%
    Total Net Revenues     $594.4        100%       $129.7         21.8%

Total net revenues for the third quarter of 2008 were $594.4 million, representing an increase of 53.7% from the corresponding period in 2007.

Non-GAAP gross profit for the third quarter of 2008 was $129.7 million, an increase of 56.6% year-over-year. Non-GAAP gross margin for the Company's standard PV module business was 23.4% and non-GAAP consolidated gross margin was 21.8%. Gross margin decreased from the second quarter of 2008 primarily due to a decrease in the average selling price resulting from the depreciation of the Euro versus the U.S. dollar and a slight increase in silicon wafer costs.

Non-GAAP operating expenses in the third quarter of 2008 totaled $37.1 million or 6.2% of total net revenues. The sequential increase in operating expenses was primarily due to increased spending on research and development of the Pluto technology.

Non-GAAP income from operations for the third quarter of 2008 was $92.6 million, an increase of 43.1% year-over-year. Non-GAAP operating margin was 15.6%.

Net interest expense was $7.9 million in the third quarter of 2008 compared to net interest expense of $5.2 million in the second quarter of 2008. The sequential increase in net interest expenses was primarily due to increased bank borrowing balances.

Foreign currency exchange loss was $16.6 million in the third quarter of 2008 compared to a foreign currency exchange gain of $2.5 million in the second quarter of 2008. The foreign currency exchange loss in the third quarter of 2008 was primarily due to the revaluation of some assets, which were impacted by the depreciation of the Euro against the U.S. dollar, and the revaluation of some liabilities, which were impacted by the appreciation of the CNY against the U.S. dollar.

Net other expenses decreased from $6.3 million in the second quarter of 2008 to $3.2 million in the third quarter of 2008. The decrease was mainly due to the reduced mark-to-market valuation losses associated with foreign currency derivative instruments.

Non-GAAP net income for the third quarter of 2008 was $60.3 million, or $0.35 per non-GAAP diluted ADS, compared to non-GAAP net income of $61.2 million, or $0.36 per non-GAAP diluted ADS in the third quarter of 2007.

On a GAAP basis, for the third quarter of 2008 gross profit was $128.3 million, an increase of 60.4% year-over-year. Gross margin for the standard PV module business was 23.1% and consolidated gross margin was 21.6% for the third quarter of 2008.

On a GAAP basis, operating expenses for the third quarter of 2008 were $41.3 million or 6.9% of total net revenues. Income from operations was $87.1 million for the third quarter of 2008, an increase of 52.0% year-over-year. Operating margin was 14.6%.