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Anti Solar Panel Dumping Is Anti Good News For Suntech In Q1 2012

May 23, 2012

Suntech Power (STP :NYSE) saw declining profits and margins in Q1 2012 as the company blamed the anti-dumping tariffs set by the U.S. government on solar panels imported from China.

The tariffs, which will have the greatest affect China’s top solar manufacturers including Suntech and Trina Solar (TSL :NYSE), are to prevent the companies from dumping cut-price panels on the U.S. market. But with solar companies already battling reduced prices and lackluster demand in the industry, the timing of the tariff couldn’t be worse.

Net revenues for Q1 2012 were $409.5 million, a 53 percent drop from the $877 million reported in Q1 2011. Cost of revenues for the quarter were $407.1 million a 43 percent drop from the $694.3 million reported in the same quarter of the previous year.

Gross margins and gross profits were hammered in Q1 2012. Gross margins were a razor thin 0.6 percent, a 98 percent drop year-over-year. Gross profits suffered a similar fate coming at $2.4 million for the quarter.

The net loss attributable to holders of American Depositary Shares (ADS) was $133 million, or $0.74 per ADS, for Q1 2012. This is a steep decline from the net income of $31.9 million, or $0.17 per ADS, last year in the same quarter.

Suntech believes the Q2 2012 will be better as they expect shipments to increase by 20 percent sequentially and gross margins to improve to 3 to 6 percent.

Shares of Suntech were only down 3.08 percent in afternoon trading.

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