SunPower finds that its Q1 revenues didn’t escape impact from Italy’s FiT issues



SunPower released its first quarter 2011 financial results today confirming its earlier suspicion that Q1 revenue would be affected by Italy’s project delays. Revenue for Q1 2011 came in at US$451.4 million, a 30% year-over-year increase, but a 52% drop from Q4 2010’s US$937.1 million. Gross margin was finalized at 19.6% GAAP, compared to Q4’s 25.4%.

“Revenues and inventory levels in the first quarter were impacted by the pause in business activity in Italy, as several projects awaited clarity on the new tariffs,” said Dennis Arriola, SunPower CFO.  “Italy's new feed-in-tariff, announced earlier this month, follows the trend across Europe of favoring rooftop solar investment.  SunPower's high efficiency systems and flexible dealer/partner network positions us effectively to respond to the uncapped rooftop market in Italy and other countries.  As a result, we are in the process of optimizing our portfolio allocation geographically and across our downstream channels for the remainder of 2011.  We expect to complete this process in the near future and plan to revise our 2011 guidance before the end of the second quarter to reflect the recent changes in Italy.”

SunPower remains the number two in market shares in Italy with 500 Italian dealers and points to its acquisition by French oil and gas company, Total, as leading it to future expansion possibilities. “We were also pleased to recently announce Total's transformational investment in SunPower through a share tender offer which began on May 3,” commented Tom Werner, SunPower president and CEO.  “With Total's US$1 billion credit support agreement, solar research and development investments and other resources available through its global network, we will be taking the next step in positioning our business for accelerated growth and long-term success. Our relationship with Total will improve our capital structure enabling SunPower to accelerate our power plant and commercial development businesses, and expand our manufacturing capacity with lower cash requirements.”

The company looks for revenues during Q2 to fall between US$500 to US$550 million from a recognized 160 to 190 megawatts. Guidance for fiscal 2011, remained unchanged with a recognized 825 to 920 megawatts, however, SunPower advised that it would be releasing a revised 2011 guidance call before the end of Q2 2011.

“We met our margin and bottom line financial goals in the first quarter by adjusting our downstream channels and operating expenses,” stated Werner. “Our revenue was lower than plan as a result of changing market conditions in Europe.  Operationally, we exceeded our manufacturing cost reduction targets for the quarter and remain on plan to achieve our efficiency adjusted panel cost per watt target of US$1.08 in the fourth quarter of this year.  Execution on the Fab 3 ramp continues to surpass our internal forecasts as yields and equipment efficiency again reached record levels.”

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