Earnings Update: Solarfun Beats Estimates, but Revenue Short $SOLF
Solarfunposted a $1.6 million profit, or 3 cents per share, compared with asteep loss of $418.8 million, or $7.79 per share, for the equivalentquarter last year. Investors, however, were disappointed followingguidance regarding unit price pressures anticipated through 2010.
Adjusted earnings totaled 25 cents per share, beating mean analysts’ estimate polled by FactSet Research of 23 cents per share.
Revenue increased 27% to $183.5 million, falling short of the meananalysts’ estimate. Revenue is expected to come under pressure through2010, said management in a conference call.
For 2010, the company anticipates a drop in revenue per photovoltaicmodule shipment of approximately 10% from fourth-quarter levels.
“After a transition year for Solarfun in 2009, we expect 2010 to bea year of renewed focus on manufacturing cost, product quality anddifferentiation as well as investment in customers,” Solarfun presidentPeter Xie said in a statement.
Xie said, however, that he sees 2010 module shipments increasing to600 megawatts from earlier guidance of November when the companyforecast 500 megawatts for 2010.
Solarfun’s financial results took on a subdued tone among investorsas its larger Chinese peer, Suntech Power Holdings, postedbetter-than-expected results the day before.
Worldwide tepid economic activity and tight capital markets haveprompted management to engage in a defensive posture in 2009, includingthe fourth quarter. Cash flow generated of more than $49 million wasdirected to paying down the company’s short-term obligations and toshore up its overall balance sheet in the quarter.
“During a period of substantial quarter-over-quarter demand changesand the continued volatility in the global financial system, weremained vigilant in managing our balance sheet’s quality and theflexibility. Disciplined working capital management, prudent capitalexpenditures, and the selective activity in the capital markets haveenabled us to reduce short-term debt, while maintaining a healthy cashbalance,” Xie said in a prepared statement in a conference call.
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