14 December 2011

First Solar cuts 2011 financial guidance further, to just 10% up on 2010

First Solar Inc of Tempe, AZ, USA, which manufactures thin-film photovoltaic modules based on cadmium telluride (CdTe) as well as providing engineering, procurement and construction (EPC) services, has lowered its 2011 financial guidance, due mainly to continued delays of certain projects in its systems business (attributed to “weather and other factors”).

After previously reducing its guidance for 2011 net sales from $3.7–3.9bn (given in December 2010) to $3.7–3.8bn (in late February) then $3.6–3.7bn (in August) and $3.0-3.3bn (at the end of October), First Solar has cut its forecasts again, to $2.8-2.9bn. However, this still represents growth of 10% on 2010’s $2.6bn (down from October’s forecast of 23% growth).

Likewise, after being cut from guidance of $900–970m in May then $900–960m in August and $650–760m in October, consolidated operating income guidance has been cut further, to $575-600m. Correspondingly, after being cut from guidance of $9.25–9.75 in May then $9.00–9.50 in August and $6.50–7.50 in October, guidance for earnings per diluted share (EPS) has been cut to $5.75-6.00.

Not included in the revised guidance are expected charges related to a series of initiatives to accelerate operating cost reductions and improve overall operating efficiency, most of which the firm expects to incur in the current quarter. These charges include up to $0.75 per fully diluted share of impairment and associated charges related mainly to certain equipment, and a severance charge of up to $0.10 per fully diluted share related to a workforce reduction of about 100 associates (less than 1.5% of First Solar’s workforce).

For 2012, First Solar forecasts sales of $3.7-4.0bn, including $1.7bn from the systems business. This would be up 35% on the latest 2011 sales guidance of $2.8-2.9bn. However, the firm expects drops in consolidated operating income to $425-450m and in diluted EPS to $3.75-4.25. Nevertheless, it expects to generate $0.9-1.1bn of operating cash flow, and plans capital investment of $375-$425m in 2012.

“Our diverse business model and robust project pipeline will help First Solar generate a significant amount of cash in 2012 while improving operational efficiencies, but we are recalibrating our business to focus on building and serving sustainable markets rather than pursuing subsidized markets,” says chairman & interim CEO Mike Ahearn. “By channeling our core strength in utility-scale PV systems to markets with immediate need for mass-scale renewable energy, our goal is to earn substantially all of our new revenues from sustainable markets by the end of 2014.”

See related items:

First Solar’s sales rise 89% in Q3 to $1bn

First Solar’s Q2 sales fall 6% to $533m

First Solar’s sales drop 7% in Q1; 2011 guidance cut

First Solar grows revenue 24% in 2010, despite drop off in Q4

Tags: First Solar Thin-film photovoltaic CdTe

Visit: www.firstsolar.com

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