First Solar sales were US$797.9 million in Q3: module ASPs decline

First Solar reported that net income included a one-time tax expense of US$14.7 million, due to the repatriation of US$300 million of earnings from certain of its foreign subsidiaries.

Manufacturing data points

Total MW produced in the third quarter was 350.2MW, up slightly from 344MW in the previous quarter. Production per line was reported as 59.6MW, again a slight increase over the previous quarter, which reached 59MW per line run rate.

Conversion efficiencies inched up again in the quarter, reaching 11.3%, compared to 11.2% in the previous quarter. Manufacturing cost per watt was US$0.77, up from US$0.76 in the second quarter.

Conference call updates (1)

During the conference call, Gillette noted that the rise in production costs was due to module changes to improve cell efficiencies, which impacted yield and equipment uptime in the quarter.

First Solar also increased its guidance for net sales in 2010 to between US$2.58 to US$2.61 billion, compared to the previous guidance range of US$2.5 to US$2.6 billion.

Conference call updates (2)

Gillette also provided expected global and regional PV market expectations in 2010 and beyond. He expects global PV installs to reach 13.5GW in 2010 and 15GW in 2011. However, the German market is expected to decline considerably in 2011, down from an expected 7.2GW this year to 5.9GW in 2011, because of FiT regressions and reviews expected for the EEG and electricity grid.

As Germany has been the main market for First Solar, Gillette expects Germany to be only 25-30% of revenue in 2011, down from approximately 45% of revenue in 2010.

Gillette noted that key growth strategies for the company that would mitigate the fall in expected sales in Germany would include tapping its US project pipeline (2GW) as well as price adjustments to keep sales high and develop other European markets. Continued efforts to reduce LCOE and maximize energy yield of projects would also boost sales in 2011.

Conference call updates (3)

Capital expenditures were US$138 million in the quarter.

Bruce Sohn noted during the Q&A session with financial analysts that the cost per watt increase caused by yield issues and lower manufacturing line utilization as new process enhancements were implemented would come down over time and be in line with the company roadmap. However, his comments suggested that this was not a one quarter hit as he said that “implementation became somewhat challenging,” since these new efficiency enhancements had to be rolled out on the 24 lines that were in full operation.

However, the process improvements would lead to better throughput, higher yields, and conversion efficiencies with lower manufacturing costs.

The company remained soldout in the quarter, according to the First Solar CEO.

Conference call updates (4)

First Solar executives noted that it expects do be able to complete between 500MW and 700MW of utility-scale PV projects in 2011.

Overall concerns about market declines in Germany and potentially in Italy and France were common themes raised by analysts in the call.

Conference call running commentary has now ended. Please look for blog analysis in that section of the PV-Tech website.