SunEdison Inc (NYSE:SUNE) Aims At Long-Term Profit

Denver, CO, 04/07/2014, (Avauncer.com) – SunEdison Inc (NYSE:SUNE) signed a three-year agreement with Korean based Shinsung for 660 MW (megawatts) of solar cells. The Company aims to meet the growing demand of solar energy and strengthen its performance while focusing on high margin business.

High margin business

Solar industry will provide long term growth opportunity for electricity markets compared to other sources of energy. It is believed that the industry will grow high in next 5-10 years due to growing demand of solar energy globally. So, SunEdison Inc (NYSE:SUNE) continues its focus on expansion of solar projects to meet the requirement. The Company believes that solar projects will provide long-term profit.

Long-term value addition

SunEdison’s solar energy business accounts more than 60% of total revenue during 4Q2013. Solar energy revenues (non-GAAP) were up in the recent quarter due to rising solar projects to 206 MW, compared to 91MW in the prior year period. But, operating income was low due to capacity addition as the Company retailed 127 MW projects worth of $257 million that leads to a larger loss in 4Q2013. Adjusted operating loss for the segment was $74.8 million compared to operating income of $76.6 million in the same period 2012.

Capacity additions in solar energy segment improve overall revenue, but it increases the margin pressure and affects free cash flow. Adjusted net loss was $128.7 million, or $0.48 per share, compared to net profit of $19.9 million, or $0.08 per share in 4Q2012.

But, the growing demand in the industry provides an opportunity to develop. In addition, strong pipeline projects with 3.4 GW and a backlog of 1.1 GW may increase future revenue for the Company.

What next

SunEdison Inc (NYSE:SUNE) continues focusing on high margin business such as solar energy. It plans to operate through long-term agreement with power producers that will reduce the cost of financing new projects and provide stable cash flow

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