Exhibit 99.1
China Sunergy Announces Second Quarter 2013 Financial Results
Company Reported Gross Margin of 9.3%
Grew Revenue by 16.5% Sequentially
Increased Total Shipment by 23.3% Sequentially
NANJING, China, November 7, 2013 - China Sunergy Co., Ltd. (NASDAQ: CSUN) (“China Sunergy” or “theCompany”), a specialized solar cell and module manufacturer, today announced its financial results for the second quarterended June 30, 2013.
Mr. Stephen Cai, CEO of China Sunergy, commented, “We are pleased with the solid second quarter financial results across all key financial metrics, including better-than-expected revenue and shipment volume, and significantly improved operating profitability. Leveraging on our Turkey manufacturing plant, we further expanded sales in Europe and emerging markets.”
“At the same time, the solar market showed some near-term positive momentum, with a sequential improvement in ASP and spot prices for wafers and modules, and a surge in demand stimulated by a series of favorable government policies and plans around the world.” Mr. Cai added.
Second Quarter 2013 Financial Highlights
| · | Total revenuewas US$71.9 million, an increase of 16.5% from US$61.7 million in the first quarter of 2013. |
| · | Shipmentstotaled 126.4MW, an increase of 23.3% (23.9MW) from 102.5MW in the first quarter of 2013. Module shipments including 25.7MW module processed under OEM arrangements were 125.1MW, or 99.0% of total shipments. |
| · | Average selling price (“ASP”)for the Company’s solar modules was US$0.63 per watt, an increase of 6.8% from US$0.59 in the first quarter of 2013. |
| · | Conversion costs for cellsdecreased 6.25% sequentially to US$0.15 per watt, from US$0.16 in the first quarter of 2013. Conversion cost for modules was US$0.20 per watt, unchanged from last quarter. |
| · | Gross profitwas US$6.7 million, and gross margin was 9.3%, compared with gross profit of US$0.3 million and gross margin of 0.4% in the first quarter of 2013. |
| · | Net loss attributable to ordinary shareholdersnarrowed significantly to US$1.4 million, from US$22.9 million in the preceding quarter. |
| · | Net loss attributable to ordinary shareholders per ADSimproved to US$0.11, compared to net loss per ADS of US$1.71 in the first quarter of 2013. |
| · | Operating cash inflow was US$6.3million, compared to net cash outflow of US$41.7 million in thefirst quarter of 2013. |
| | · | Cash, cash equivalents and restricted cash totaled US$219.8 million, as of June 30, 2013. |
Second Quarter 2013 Financial Review
Total Revenue and Shipments
For the second quarter of 2013, total revenue was US$71.9 million, an increase of 16.5% from the first quarter of 2013, primarily driven by a combination of higher shipments and ASP.
Total shipments for the second quarter of 2013 were 126.4MW, an increase of 23.3% from the first quarter of 2013. Germany became the largest market for the Company, accounting for 29.1% of total revenue in the second quarter of 2013, while France, remaining solid for the Company, was the second largest market for the Company, contributing 28.4% of total revenue in the second quarter of 2013, followed by China and Japan, contributing 10.3% and 7.7% of total revenue, respectively.
Gross Profit and Gross Margin
Gross profit for the second quarter was US$6.7 million, and gross margin turned to 9.3%, compared to gross margin of 0.4% for the first quarter of 2013. Inventory provision was approximately US$12,000, compared to US$0.3 million in the prior quarter. The sequential increase in gross margin in the second quarter of 2013 was primarily attributable to the increased average selling price of solar modules, decreased inventory provision in this quarter, and the Company’s continuous manufacturing cost reduction execution.
Module ASP for the second quarter was US$0.63 per watt, which increased by four cents or 6.8% compared with that of the last quarter. The higher ASP was primarily driven by an improvement in imbalance of supply and demand due to the anti-dumping legislation in the European Union, as well as increased shipments to high pricing regions, such as Australia and US.
Costs
Blended wafer costs in the second quarter of 2013 were US$0.23 per watt, which was one cent or 4.5% higher than those of the last quarter. Conversion costs of cells and modules manufactured in the second quarter of 2013 were US$0.15 and US$0.20 per watt, respectively.
Operating Expense, Operating Profit/Loss and Net Income/Loss
Operating expenses decreased to US$11.2 million in the second quarter of 2013, from US$15.2 million in the first quarter of 2013. The decrease in operating expenses was mainly attributable to a decrease of US$1.1 million in marketing expenses and a bad debt reversal of US$2.0 million attributable to collection efforts in the second quarter of 2013, compared to a bad debt provision of US$0.2 million in the first quarter of 2013.
Loss from operations decreased to US$4.6 million in the second quarter of 2013, compared to US$15.0 million in the first quarter of 2013.
Correspondingly, net loss attributable to ordinary shareholders was US$1.4 million and Non-GAAP net loss1 attributable to ordinary shareholders was US$3.4 million for the second quarter of 2013.
Amount due from Related Parties
Amount due from related parties totaled US$132.1 million as of June 30, 2013, an increase of US$42.5 million compared to US$89.6 million as of the end of first quarter. The increased balance was due primarily to short-term interest-free advances that the Company provided to one of the related companies, CEEG Nanjing Semi-Conductor Co. Ltd (“CEEG Semi-Conductor”). The short-term interest-free advances were provided to address liquidity pressure on CEEG Semi-Conductor and China Electric Equipment Group Co., Limited (“CEEG Group”), and in turn preserve China Sunergy’s credit and liquidity, as CEEG Group guaranteed most of the Company’s bank loans. As of October 30, 2013, CEEG Semi-Conductor had repaid all of the short-term interest-free non-trading advances.
Amount due to Related Parties
Amount due to related parties totaled US$25.8 million as of June 30, 2013, a decrease of US$48.2 million compared to US$74.0 million as of the end of first quarter.
Inventory
Inventories at the end of the second quarter of 2013 totaled US$46.5 million, a decrease of US$22.6 million from the prior quarter, driven by higher shipment and optimized production control. The Company strives to maintain an optimal inventory level and continues to diligently monitor and balance its inventories.
Cash and Cash Flow
As of June 30, 2013, the Company had cash and cash equivalents of US$60.1 million, and restricted cash of US$159.7 million. Operating cash inflow turned positive to US$6.3 million for the second quarter of 2013, compared with operating cash outflow of US$41.7 million in the first quarter of 2013, primarily driven by narrowed net loss, lower inventory, and higher account payables.
1China Sunergy's Non-GAAP financial measures are its corresponding GAAP financial measures as adjusted by excluding costs related to certain charges, including inventory and bad debt provisions. Please refer to “Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures” at the end of this press release.
Additional Company Updates Subsequent to Second Quarter 2013
ŸChina Sunergy Further Expanded into Malaysia Market: the Company further expanded its market share in Malaysia market with shipment of 1MW QSAR solar modules for the first megawatt-level ground-mounted system of Pekat Solar Sdn Bhd ("Pekat "), a subsidiary company of Pekat Group of Companies, a renowned solar photovoltaic service and engineering solution provider in Malaysia certified by Ministry of Energy, Green Energy and Water. Pekat opted China Sunergy to be the exclusive partner for its first ground-mounted system as the Company's high-efficient and PID-free QSAR modules appropriately fit.
ŸChina Sunergy Commercialized New Super Black Mono Modules:the Company introduced a series of new highly efficient Super Black mono modules, following an initial custom order from Solar Marketing & Sales LLC for a 60KW rooftop project in Hawaii. The Super Black mono modules offer a pure black aesthetic covering the entire module body, including welding strips. This aesthetic advantage makes them well suited for high-end rooftop installations and other integrated constructions. The Super Black modules are certified for salt and ammonia resistance, while also offering up to 7200pa snow pressure and 2400pa wind pressure resistance. The Super Black mono modules were shipped in August 2013.
ŸChina Sunergy Wins 9.9MW Solar Module Contracts in Romania:the Company has signed two solar module supply contracts totaling 9.9MW with Bester Generación (“Bester Generación”), an engineering, procurement and construction company headquartered in Spain. The solar modules were supplied from the Company’s Turkey plant to Romania in September 2013.
ŸChina Sunergy's High-Efficient Mono Cells Achieves Certified New Conversion Efficiency Record of 20.26%: the Company’s new generation of high-efficient mono-crystalline solar cells have reached 20.26% conversion efficiency in the pilot research and development line, and have received certification recently from the Fraunhofer Institute for Solar Energy Systems ISE the largest solar energy research institute in Europe.
Business Outlook
Mr. Cai continued, “There were many positive takeaways for China Sunergy in the second quarter, in terms of our operations and the improving market environment. However, during the second quarter, Chinese banks significantly tightened credit facilities to solar companies, which caused us to face a constrained working capital and reduced our ability to procure adequate inventory for subsequent production. As such, we anticipate lower shipment volume and profitability for the third quarter of 2013, and correspondingly, we also anticipate lower total shipment for full year 2013.”
For the third quarter of 2013, the Company estimates that total shipments will be approximately 110MW including approximately 20MW of solar module processed under OEM arrangement. Gross margin for the third quarter of 2013 is expected to be low single-digit, based on the average Euro-US dollar exchange rate in September 2013.
For the full year 2013, the Company revises its total shipment estimates to range between 440MW to 480MW, from the prior range of 500MW to 550MW.
This guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.
Conference Call
China Sunergy’s management will host an earnings conference call on November 7, 2013 at 8:00 a.m. Eastern Time (November 7, 2013 at 9:00 p.m. Beijing/Hong Kong time). The management team will be on the call to discuss financial highlights of the second quarter 2013, provide business outlook and answer questions.
To access the conference call, please dial:
| United States toll-free: | +1 866 519 4004 |
| International: | +65 6723 9381 |
| Singapore: | +65 6723 9381 |
| China: | 800 819 0121(Domestic) /400 620 8038 (Domestic Mobile) |
| Hong Kong: | +852 2475 0994 |
Please ask to be connected to Second Quarter 2013 China Sunergy Co., Ltd. Earnings Conference Call and provide the following passcode: 25754666.
China Sunergy will also broadcast a live audio webcast of the conference call. The webcast will be available by visiting the “Investor Relations” section of the company’s web site at http://www.csun-solar.com.
Following the earnings conference call, an archive of the call will be available by dialing:
| United States toll-free: | +1 855 452 5696 |
| International: | +61 2 8199 0299 |
The passcode for replay participants is: 25754666. The telephone replay also will be archived on the “Investor Relations” section of the company’s website for seven days following the earnings announcement.
About China Sunergy Co., Ltd.
China Sunergy Co., Ltd. (NASDAQ:CSUN) designs, manufactures and delivers high efficiency solar cells and modules to the world from its production centers based in China and Turkey. China Sunergy also invests in high potential solar projects. Founded in 2004, China Sunergy is well known for its advanced solar cell technology, reliable product quality, and excellent customer service.
For more information, please visit http://www.csun-solar.com.
Investor and Media Contacts:
Asia Bridge Group Limited
Wendy Sun Phone: + 86 10 8556 9033 Email: wendy.sun@asiabridgegroup.com | |
China Sunergy Co., Ltd.
CSUN IR
Phone: + 86 25 5276 6666-6694
Email:IR@chinasunergy.com
Safe Harbor Statement
This announcement may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts in this announcement are forward-looking statements. These forward-looking statements are based on current expectations, assumptions, estimates and projections about the Company and the industry, and involve known and unknown risks and uncertainties, including but not limited to, the Company's failure to maintain its listing qualification due to, among other things, volatility in the Company's ADS price; the Company's ability to raise additional capital or renew existing bank borrowings as they become due to finance the Company's activities; the Company's customers' financial condition and creditworthiness, and their ability to settle accounts receivables; the effectiveness, profitability, and the marketability of its products; litigations and other legal proceedings, including any decisions by the US International Trade Committee and Department of Commerce on the petitions filed; the economic slowdown in China and elsewhere and its impact on the Company's operations; demand for and selling prices of the Company's products, execution of our strategy to expand into downstream solar power businesses, the future trading of the common stock of the Company; the ability of the Company to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; future shortage or availability of the supply of raw materials; impact on cost-competitiveness as a result of entering into long-term arrangements with raw material suppliers and other risks detailed in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
The following financial information is extracted from the Company’s condensed consolidated financial statements for the respective periods.
China Sunergy Co., Ltd
Unaudited Condensed Consolidated Income Statement Information
(In US$’000, except ADS and per ADS data)
| | | Jun 30, 2013 | | | Mar 31, 2013 | | | Jun 30, 2012 | |
| | | | | | | | | | |
| Sales to third parties | | | 71,823 | | | | 60,855 | | | | 106,943 | |
| Sales to related parties | | | 85 | | | | 843 | | | | 3,441 | |
| Total sales | | | 71,908 | | | | 61,698 | | | | 110,384 | |
| Cost of goods sold | | | (65,247 | ) | | | (61,435 | ) | | | (110,669 | ) |
| Gross profit | | | 6,661 | | | | 263 | | | | (285 | ) |
| Operating expenses: | | | | | | | | | | | | |
| Selling expenses | | | (4,610 | ) | | | (5,756 | ) | | | (4,850 | ) |
| General and administrative expenses | | | (5,053 | ) | | | (7,628 | ) | | | (9,891 | ) |
| Research and development expenses | | | (1,579 | ) | | | (1,854 | ) | | | (2,245 | ) |
| Total operating expenses | | | (11,242 | ) | | | (15,238 | ) | | | (16,986 | ) |
| Income (loss) from operations | | | (4,581 | ) | | | (14,975 | ) | | | (17,271 | ) |
| Interest expense | | | (5,076 | ) | | | (7,454 | ) | | | (7,917 | ) |
| Interest income | | | 1,785 | | | | 1,557 | | | | 2,152 | |
| Other income/(expenses), net | | | 7,451 | | | | (3,007 | ) | | | (10,387 | ) |
| Changes in fair value of derivatives | | | 0 | | | | 1,410 | | | | 0 | |
| Income (loss) before income tax | | | (421 | ) | | | (22,469 | ) | | | (33,423 | ) |
| Income tax benefit (expense) | | | (1,351 | ) | | | (460 | ) | | | 3,141 | |
| Net income (loss) | | | (1,772 | ) | | | (22,929 | ) | | | (30,282 | ) |
| Less: non-controlling interest | | | (361 | ) | | | (70 | ) | | | | |
| | | | | | | | | | | | | |
| Net income (loss) attributable to ordinary shareholders | | | (1,411 | ) | | | (22,859 | ) | | | (30,282 | ) |
| | | | | | | | | | | | | |
| Net income (loss) attributable to ordinary shareholders per ADS | | | | | | | | | | | | |
| Basic | | | ($0.11 | ) | | | ($1.71 | ) | | | ($2.26 | ) |
| Diluted | | | ($0.11 | ) | | | ($1.71 | ) | | | ($2.26 | ) |
| | | | | | | | | | | | | |
| Weighted average ADS outstanding | | | | | | | | | | | | |
| Basic | | | 13,372,292 | | | | 13,372,292 | | | | 13,372,292 | |
| Diluted | | | 13,372,292 | | | | 13,372,292 | | | | 13,372,292 | |
China Sunergy Co., Ltd
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In US$’000)
| | | | | | For the 3 months ended | |
| | | Jun 30, 2013 | | | Mar 31, 2013 | | | Jun 30, 2012 | |
| | | | | | | | | | | | | |
| Net income (loss) | | | (1,772 | ) | | | (22,929 | ) | | | (30,282 | ) |
| Other comprehensive income | | | | | | | - | | | | - | |
Foreign currency translation adjustments,
net of tax impact nil for the three quarters ended June 30, 2013, March 31, 2013 and June 30, 2012 | | | 853 | | | | (1,015 | ) | | | (939 | ) |
| | | | | | | | | | | | | |
| Comprehensive income (loss) | | | (919 | ) | | | (23,944 | ) | | | (31,221 | ) |
| | | | | | | | | | | | | |
| Less: | | | | | | | | | | | | |
| Comprehensive loss attributable to noncontrolling interest | | | (361 | ) | | | (70 | ) | | | - | |
| Comprehensive income (loss) attributable to ordinary shareholders of China Sunergy Co., Ltd | | | (558 | ) | | | (23,874 | ) | | | (31,211 | ) |
China Sunergy Co., Ltd
Unaudited Condensed Consolidated Balance Sheet Information
(In US$’000)
| | | Jun 30, 2013 | | | Mar 31, 2013 | | | Jun 30, 2012 | |
| Assets | | | | | | | | | |
| Current Assets | | | | | | | | | |
| Cash and cash equivalents | | | 60,090 | | | | 102,293 | | | | 204,710 | |
| Restricted cash | | | 159,666 | | | | 203,181 | | | | 211,781 | |
| Accounts receivable, net | | | 78,173 | | | | 70,696 | | | | 139,621 | |
| Other receivable, net | | | 22,583 | | | | 25,911 | | | | 30,386 | |
| Project assets | | | 18,557 | | | | 17,891 | | | | 13,570 | |
| Income tax receivable | | | | | | | | | | | 1,901 | |
| Inventories, net | | | 46,484 | | | | 69,093 | | | | 53,320 | |
| Advance to suppliers, net | | | 4,664 | | | | 6,193 | | | | 5,308 | |
| Amount due from related parties | | | 132,101 | | | | 89,645 | | | | 53,875 | |
| Current deferred tax assets | | | 1,579 | | | | 1,391 | | | | 12,293 | |
| Restricted cash-collateral account | | | 3,131 | | | | 2,009 | | | | 3,486 | |
| Other current assets | | | - | | | | 1,339 | | | | 35 | |
| Total current assets | | | 527,028 | | | | 589,642 | | | | 730,286 | |
| Property, plant and equipment, net | | | 219,727 | | | | 214,587 | | | | 180,190 | |
| Prepaid land use rights | | | 28,218 | | | | 28,383 | | | | 28,869 | |
| Deferred tax assets | | | 6,628 | | | | 6,439 | | | | 17,598 | |
| Intangible assets | | | 524 | | | | 1,271 | | | | 3,410 | |
| Amount due from related parties-non current | | | | | | | | | | | 11,858 | |
| Other long-term assets | | | 1,930 | | | | 2,426 | | | | 4,102 | |
| Total assets | | | 784,055 | | | | 842,748 | | | | 976,313 | |
| | | | | | | | | | | | | |
| Liabilities and equity | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | |
| Short-term bank borrowings | | | 472,229 | | | | 501,110 | | | | 447,264 | |
| Accounts payable | | | 126,837 | | | | 119,093 | | | | 72,774 | |
| Notes payable | | | 20,326 | | | | 20,932 | | | | 54,175 | |
| Accrued expenses and other current liabilities | | | 19,584 | | | | 24,666 | | | | 19,083 | |
| Income tax payable | | | 3,473 | | | | 1,598 | | | | | |
| Amount due to related parties | | | 25,800 | | | | 73,950 | | | | 129,562 | |
| Collateral account payable | | | 3,131 | | | | 2,009 | | | | 3,486 | |
| Convertible bond payable | | | - | | | | 1,500 | | | | 1,500 | |
| Current deferred tax liability | | | 219 | | | | 365 | | | | 357 | |
| Total current liabilities | | | 671,599 | | | | 745,223 | | | | 728,201 | |
| Long-term debt | | | 103,134 | | | | 91,120 | | | | 129,060 | |
| Accrued warranty costs | | | 18,813 | | | | 17,857 | | | | 16,292 | |
| Other liabilities | | | 9,046 | | | | 4,307 | | | | 3,784 | |
| Total liabilities | | | 802,592 | | | | 858,507 | | | | 877,337 | |
| | | | | | | | | | | | | |
| Equity: | | | | | | | | | | | | |
| Ordinary shares: US$0.0001 par value; 267,287,253 shares issued outstanding as of September 30, 2012 and December 31, 2011. | | | 27 | | | | 27 | | | | 27 | |
| Additional paid-in capital | | | 185,367 | | | | 187,225 | | | | 185,367 | |
| Accumulated profit (deficit) | | | (238,857 | ) | | | (237,446 | ) | | | (120,841 | ) |
| Accumulated other comprehensive income | | | 35,344 | | | | 34,507 | | | | 34,423 | |
| Total equity attributable to China Sunergy Co. Ltd. | | | (18,119 | ) | | | (15,687 | ) | | | 98,976 | |
| Non-controlling interests | | | (418 | ) | | | (72 | ) | | | | |
| Total equity | | | (18,537 | ) | | | (15,759 | ) | | | 98,976 | |
| Total liabilities and equity | | | 784,055 | | | | 842,748 | | | | 976,313 | |
Reconciliation of Non-GAAP results of Operations Measures to the Nearest Comparable
GAAP Measures
(In US$’000)
| | |
For the 3 months ended | |
| | | Jun 30, 2013 | | | Mar 31, 2013 | | | Jun 30, 2012 | |
| | | | | | | | | | | | | |
| GAAP Gross Profit | | | 6,661 | | | | 263 | | | | (285 | ) |
| Inventory Write Down | | | 12 | | | | 354 | | | | 382 | |
| Non-GAAP Gross Profit | | | 6,673 | | | | 617 | | | | 97 | |
| | | | | | | | | | | | | |
| GAAP Net loss attributable to ordinary shareholders | | | (1,411 | ) | | | (22,859 | ) | | | (30,282 | ) |
| Inventory Write Down | | | 12 | | | | 354 | | | | 382 | |
| Bad Debts provision | | | (2,031 | ) | | | 162 | | | | 3,119 | |
| Non-GAAP Net loss attributable to ordinary shareholders | | | (3,430 | ) | | | (22,343 | ) | | | (26,781 | ) |
| | | | | | | | | | | | | |
| Non-GAAP Net loss attributable to ordinary shareholders per ADS | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Basic | | | ($0.26 | ) | | | ($1.67 | ) | | | ($2.00 | ) |
| Diluted | | | ($0.26 | ) | | | ($1.67 | ) | | | ($2.00 | ) |
| | | | | | | | | | | | | |
| Weighted average ADS outstanding | | | | | | | | | | | | |
| Basic | | | 13,372,292 | | | | 13,372,292 | | | | 13,372,292 | |
| Diluted | | | 13,372,292 | | | | 13,372,292 | | | | 13,372,292 | |
