Solar company Sino-American Silicon Products Inc (SAS, 中美晶) on Thursday reported a net loss of NT$2.28 billion (US$72.7 million) for last quarter, due to a substantial reliability provision stemming from a polysilicon supply contract.
The multi-year supply contract has incurred a NT$4.35 billion reliability provision, as falling prices for the raw material impaired the value of the contract, which was signed in 2011, SAS said.
Operating profit plunged to NT$622 million from NT$5.06 billion a quarter earlier.
Excluding the provision, SAS would have seen a sequential improvement in its operating income, the company said in a statement.
The provision caused the company to report losses per share of NT$3.92 last quarter, compared with earnings per share (EPS) of NT$3.15 in the previous quarter.
It also lowered the company’s gross margin to 11.3 percent, from 37.12 percent in the previous quarter, and led the operating margin to hit minus-3.3 percent, compared with 28.93 percent, SAS said.
As all supply contracts have been settled, no provision would be booked in the coming quarters, the company said.
SAS is optimistic about its business outlook thanks to an improvement in its core solar business, as it has begun generating profits from the production of solar wafers, cells and modules, and the construction of solar farms for customers.
The firm’s 51-percent-owned semiconductor subsidiary, GlobalWafers Co (環球晶圓), would also lend support to the parent company, it said.
GlobalWafers, the world’s No. 3 silicon wafers supplier, last quarter made NT$3.55 billion in net profit, or EPS of NT$8.15. The subsidiary last quarter contributed about 90 percent to SAS’ revenue.
In the first half of this year, SAS lost NT$444 million, a reversal to net profit of NT$1.7 billion in the same period last year.
Operating profit fell to NT$5.69 billion, from NT$6.74 billion a year earlier.
However, revenue in the first six months was little changed at NT$34.16 billion, compared with NT$34.2 billion a year earlier.