Sandy isn’t just wreaking havoc for utilities and conventional power plant companies on the east coast. The hurricane is also delaying some solar power plant project work for First Solar, which on Thursday reduced its 2012 sales forecast and also boosted its earnings projection.
The Arizona-based company said the hurricane is also disrupting the supply of components for its solar products, which include panels and trackers that prop up the panels and tilt them to follow the sun’s movement throughout the day. For 2012, First Solar now expects to generate $3.5 billion to $3.8 billion in sales — previously it was looking at $3.6 billion to $3.9 billion. Non-GAAP earnings should hit $4.40 to $4.70 per share, however, instead of $4.20 to $4.70.
The company issued the forecast along with its third-quarter financial results, which saw its sales decline year-over-year sales to $839.1 million from $957.3 million. First Solar posted a net income of $1 per share for the third quarter, down from $2.25 per share in the same period a year ago, thanks to charges related to its restructuring efforts to reduce costs. But still, a profit in a difficult year.
“The solar market remains challenging, but we are continuing to gain traction in the new sustainable markets we’re targeting and expanding our global presence,” said Jim Hughes, First Solar’s CEO, during a conference call with analysts.
First Solar executives highlighted the progress they have made in opening up new markets. The company has vowed to build its business in places with minimal government subsidies, which so far have been responsible for the rise of the global solar market. Europe has been the largest market, but the pace of its growth will likely slow over time as governments gradually reduce their incentives.
During the third quarter, the company announced it was chosen to build a 13 MW power plant for the Dubai Electricity & Water Authority. First Solar inked deals to sell its cadmium-telluride solar panels for a 25 MW project in the state of Rajasthan in India and for two other projects totaling 50 MW in the same state. The company also signed a memorandum of understanding with a power plant operation and maintenance company in Indonesia to work on 100 MW of projects.
First Solar also hired Bruce Yung as its China manager during the third quarter. The company tried to crack the Chinese market before but hasn’t seen much success. Although China presents lots of opportunities, its government also is keen on boosting the domestic market for Chinese solar manufacturers.
In recent years, First Solar has been building its power plant development expertise and amassed an impressive pipeline of projects under development. That business is more lucrative – the company can make money from developing, building and operating solar power plants (for owners it sells the power plants to) that use its own solar panels. The company is building the largest solar power plant project in the U.S. – the 550MW Topaz Solar Farms in central California. The vast majority of the 3 GW of projects under development that it’s inked power sales agreement contracts for are in North America. Now the company’s hope is to develop solar power plants in other parts of the world.
First Solar has no intention of conquering the rooftop segment – its panels are less expensive but also less efficient at converting sunlight into electricity as other major brands. That means an array with First Solar’s panels will take up more space than the one with more efficient solar panels. Hughes also told analysts that the rooftop market has less brand loyalty and cares less about how well the solar panels will perform over decades.
Photos of Topaz Solar Farms by Ucilia Wang