New Delhi: First Solar Inc on Wednesday said a 30 percent slide in panel prices has forced it to walk away from some money-losing supply contracts and it is working to accelerate the introduction of a cheaper, more competitive module.
The largest U.S. solar equipment maker said the price slide, driven by a fall-off in demand in China and resulting global oversupply of panels, presents significant challenges to the upcoming year. The company said there were signs that prices had stabilized this quarter.
Despite the difficult market conditions, First Solar beat analysts’ profit expectations for the sixth straight quarter and raised its full-year gross margin forecast for the fourth time.
The company’s shares initially rose 5 percent in after-hours trade following the report, but later were little changed from their market close of $40.58 after executives discussed the challenging market in a conference call.
The company reported year-to-date bookings of 1.6 gigawatts, up 14 percent from 1.4 GW three months earlier. Customers have delayed signing contracts in hope of further price declines and the company has also passed on some deals because they did not make economic sense, First Solar said.
“We won’t chase pricing to the bottom,” Chief Financial Officer Alex Bradley said on the conference call.
The company cut its net sales forecast to $2.8 billion-$2.9 billion from $3.8 billion-$4 billion, because it revised the sale timing for its California Flats and Moapa projects to next year. The delay also helped increase gross margins.
First Solar declined to give an outlook for 2017, saying it would provide more detail on Nov. 16. At that time, Chief Executive Mark Widmar said the company will disclose its plans for its new Series 5 and Series 6 modules.
If the company cannot reduce the cost of the Series 5, a module unveiled just months ago, it will speed up the introduction of the next-generation Series 6, Chief Executive Mark Widmar said. Originally, the company had expected the two products to be on the market at the same time.
“But given the current market environment we’re reevaluating that,” Widmar said.
First Solar’s net income fell to $154.1 million, or $1.49 per share, in the quarter, from $349.3 million, or $3.41 per share, a year earlier.
Excluding items, the company earned $1.22 per share, well above the average analyst of 74 cents per share, according to Thomson Reuters I/B/E/S.