First Solar adjusts 2021 guidance due to freight costs

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First Solar is anticipating that its nameplate manufacturing capacity will reach 16GW in 2024. Image: First Solar.

First Solar has lowered its earnings and module shipment guidance for 2021 as the company continues to anticipate elevated shipping costs for the remainder of the year.

The ‘Solar Module Super League’ member cut the upper bound of its full year operating income guidance from US$640 million to US$625 million, while shipments are expected to be between 7.6 – 8GW, representing a 200MW decrease on the low end of its previous guidance range.

Nonetheless, the company slightly increased its 2021 net sales guidance, which is expected to be in the range of US$2.875 billion – US$3.1 billion.

Challenges such as heightened fuel costs, vessel delays and constrained container availability contributed to lower-than-anticipated shipments in Q2 and higher freight costs, said First Solar CEO Mark Widmar during a conference call with investors.

Meanwhile, while the company has been able to maintain manufacturing operations in Malaysia and Vietnam, the rise of COVID-19 cases and potential restrictions are said to present a risk to production at those sites.  

In a move to limit its exposure to inflated freight costs, Widmar said the company has accommodated some requests for delayed module shipments from its customers.

First Solar’s Q2 net sales were US$629 million, down 2% year-on-year and 22% lower than Q1, when the company was boosted by the sale of a 900MWdc solar project portfolio in Arizona.

Operating income reached US$110 million, up from the US$51 million posted in the same quarter last year, while year-to-date net bookings stood at 9GWdc at the end of Q2 2021.

Coinciding with its results statement, the company revealed plans to build a 3.3GWdc module assembly facility in India that is expected to start commercial operations in the second half of 2023. That capacity expansion is in addition to another planned 3.3GWdc plant in Ohio, where the company has recently started site preparation.

Boosted by these new facilities, First Solar is anticipating that its nameplate manufacturing capacity will double to 16GW in 2024.

Widmar said the momentum that the company has cultivated, paired with an increasingly favourable policy environment, presents a “compelling growth opportunity in the near-to mid-term”.

Conference call transcript from Seeking Alpha.

6 June 2023
Join us in Napa to unlock the key to reliable PV module supply to the U.S. market in 2023 & 2024. We'll also be gathering the main players in the US solar market for some wine tasting!

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