China based Suntech Power Holdings said today (August 22) that a sequential fall of 5.3% in gross profit was due, but not entirely down, to a $91.9M write-off related to its settlement with US based MEMC.

Suntech signed a supply agreement back in 2006 with MEMC for it to supply solar wafers over 10-years, with pre-determined pricing on a take or pay basis beginning in January 2007.

As part of the original agreement Suntech gave funds to MEMC in the form of a security deposit and MEMC was allowed to purchase up to a 4.99% of Suntech.

However, since the market downturn in early 2009, issues with price and volume purchase obligations for Suntech under the agreement made the contract impossible to work.

MEMC agreed to end the agreement in exchange for the payoff, which is revealed in full in Suntech’s accounts.

The settlement aside total net revenues were $830.7M in the second quarter of 2011, which is actually an increase of 32.9% in year-over-year earnings.

This comes from an increase in total PV shipments of 2% sequentially and 48% in year-over-year terms.

However, the business saw a fall in total net revenues for the second quarter of 2011 to $830.7M compared to $877M in the first quarter of 2011 and $625.1 million in the second quarter of 2010.

The sequential decline of revenues was primarily due to a decline in the average selling price of PV products, which was partially offset by an increase in shipments.

Suntech’s chairman and CEO, Dr Zhengrong Shi, said: “In a competitive market environment, our core operations performed well as customers continued to demonstrate their preference for Suntech’s superior quality and highly bankable solar products.

“With 48% shipment growth year-over-year, we achieved our shipment guidance and continued to improve our position in the Americas and emerging solar markets.

“Our pipeline to supply bankable utility-scale solar projects continued to build during the quarter, most notably with our 190MW partnership with Solarhybrid in Europe, and a recently-inked 200MW agreement for multiple projects in North America.

“We are also gaining traction in China’s utility solar market, which has been stimulated by the introduction of a national Feed-In Tariff (FIT).”

The full results can be read here.

Luke Walsh

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