Suntech Power Executive Insights: Chinese & U.S. Market Shares, Cash Flow

On Wednesday, Suntech Power Holdings Co., Ltd. ADR (NYSE:STP) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Chinese & U.S. Market Shares

Susie Min – Deutsche Bank: This is Susie Min asking the question for Vishal Shah. You just alluded to it earlier that you’re working with your banking partners to improve your balance sheet, and I was wondering some of your peers have been able to successfully raise funds in the local debt market. What are your plans to address your short-term debt? Are you planning to tap the local market and then I have a follow-up question?

David King – CFO: This is David. We are actively pursuing the same avenue at this point.

Susie Min – Deutsche Bank: Then, what are your expectations about market share and your market share in China and the U.S. this year? How much do you expect to sell there?

Dr. Zhengrong Shi – Founder, Chairman and CEO: Yeah, Andrew?

Andrew Beebe – Chief Commercial Officer: This is Andrew. I think in the U.S. we plan to continue to hold our number one position. We were probably 21% or 22% last year, and I think we’ll see that grow some this year. In China, we’ll increase the percentage of our revenue that comes from the Chinese market overall as a percentage of our total revenue, but I don’t think we have a specific market share target for China. We are looking for a rationalized market in China where there is a focus not just on lowest cost, but also on high quality and LCOE-focused offerings.

Susie Min – Deutsche Bank: Is that still in line with the 300, 400 megawatt number that you mentioned last quarter?

Andrew Beebe – Chief Commercial Officer: Yeah, I think we’ll see our targets in line or above that, yeah.

Cash Flow

Brandon Heiken – Credit Suisse: This is Brandon Heiken speaking on behalf of Satya Kumar. You mentioned that CapEx guidance in 2012 of $120 million to $150 million. What are your thoughts on operating cash flow for the rest of the year?

David King – CFO: We are aiming at a slightly positively cash flow for the year.

Brandon Heiken – Credit Suisse: And you mentioned that the accounts payable were a bit higher. Has there been changes in the credit terms with your customers?

David King – CFO: Yeah, I think this is a part of the industry dynamics and we have a lot of long-term partners willing to work with us to go through these difficult times, and this is consistent with the industry as a whole.