Los Angeles, United States — ESI-AFRICA.COM — 04 May 2011 – First Solar Incorporated “’ described as the world’s most valuable solar company “’ has reported a sharp drop in quarterly net earnings due to lower selling prices and higher costs, and its shares have slid almost 5% in after-hours trade.
The company posted quarterly net earnings that topped Wall Street estimates and left its full-year forecasts unchanged. But some analysts said investors wanted more detailed guidance from the industry amid fears that European subsidy cuts would hammer demand.
“The stock is down, which is really I think a reflection of the macro uncertainty. First Solar continues to provide strong results and earnings,” said Kaufman Bros analyst Jeff Bencik
To help offset the impact of incentive pullbacks in Europe, First Solar is expanding aggressively in the United States with some major projects set to break ground this year. The company is building a 290MW photovoltaic solar power project in Arizona for NRG Energy Incorporated, and is in the process of securing permits for two 550MW projects in California.
First Solar shares have slid about 23% since hitting a 52-week high in mid-February, and are down 57% from an all-time high reached in early 2008.
Net income fell 33% to US$116 million, or US$1.33 per share, from US$172.3 million, or US$2 per share, a year ago. The company said the decline was due to lower selling prices and higher costs. Sales were largely flat at US$567 million, but beat Wall Street analysts’ average estimate of US$544.37 million.
The Tempe, Arizona company reiterated its full-year earnings and sales forecasts, expecting a 2011 profit of US$9.25 to US$9.75 per share on sales of US$3.7 billion to US$3.8 billion.
First Solar is creating a pipeline of solar power projects around the world as a channel for its cadmium telluride panels, which are the cheapest in the industry. But demand for solar panels in Italy, the world’s No. 2 solar market behind Germany, has slowed this year ahead of an expected cut in government subsidies. First Solar is among the main suppliers to Italy, with sales to that nation accounting for about 12 to 13% of its overall sales last year.
The solar industry relies on government incentives to make electricity created by the sun competitive with sources such as coal and natural gas. Many governments, particularly in Europe, have implemented generous subsidies for solar power in recent years as they seek to reduce their reliance on fossil fuels and combat climate change.