Bad timing of revenue recognition for PV power plant projects and lower module sales impacted First Solar’s fourth-quarter results, while industry dynamics have forced the company to lower its 2012 revenue guidance, issued in December 2011. Net sales in Q4 were US$660 million – a decrease of US$345 million from the third quarter of 2011. Full-year revenue reached US$2.8 billion. Net sales guidance was reduced from US$3.7-US$4.0 billion to US$3.5-US$3.8 billion. Weak market demand will result in four manufacturing lines in Germany being idled for six months in 2012, or until demand improves when further action may be required, according to management. Net GAAP loss reported for Q4 was US$413 million.
“First Solar's performance in the quarter was impacted by an aggressive competitive environment, an uncertain regulatory environment, warranty-related charges, and restructuring costs incurred to help position our business for the future,” said Mike Ahearn, chairman and interim CEO of First Solar. “Despite these headwinds, we continue to make strides reducing manufacturing costs, increasing module efficiency, and successfully building out our captive project pipeline. These improvements, combined with our recent restructuring and strategic repositioning, enhance our competitive position in a very challenging environment.”
First Solar noted that it was impacted by pre-tax charges of US$393 million in the fourth quarter that were associated with a non-cash goodwill impairment for its components business, US$164 million of which was related to warranty and costs in excess of normal warranty expense, due to the manufacturing problems it experienced last year. A further US$60 million was said to be related to restructuring activities, as announced in December 2011.
The decision to start on the construction of a planned manufacturing plant in Vietnam will also be postponed due to market conditions.
Management said its production utilization rate was 94% in Q4. However, market conditions forecast for this year will lead to an expected production level of 1.5-1.8GW in 2012.