First Solar bullish in face of share price dip

Shares in solar project owner First Solar have plummeted 17 per cent, despite continued year-on-year sales growth, after the company yesterday announced third-quarter results that fell short of some analysts' expectations.

Third-quarter revenue for the company was up 38 per cent to US$480.9m compared with the same quarter last year, and net income grew 54 per cent to $153.3m year on year. However, both revenue and net income were down from the second quarter of fiscal 2009.

The effect of a rebate scheme for photovoltaic solar installations also had a downward effect on gross margins, which dropped 5.8 per cent quarter on quarter. Revenue was impacted by the company's inability to recognise sales from a 20MW solar power project in Sarnia, Ontario. That project represents $58m in revenue, which will now not be realised until the fourth quarter.

Executive chairman Mike Ahearn described it as "purely a time issue". The project, which First Solar sold to Canadian energy firm Enbridge, will be completed in December, he said.

Ahearn pointed to several challenges facing the company in the coming months. "Silicon module pricing in 2010, and therefore our module pricing, remains unclear," he said. The recent election in Germany may also affect feed-in tariff rates, creating uncertainty in the European market.

However, rocketing demand puts the company on a good footing in the longer term, he said. "The ability now to go into Q1 with normalised and low inventories is a positive factor," Ahearn said. "The strong demand is going to enable us to sell all that we produced this year."

As a result the company adjusted its 2009 guidance upwards. Revenue for the year is expected to be between $1.975bn and $2.025bn, up from a previous estimate of $1.9bn to $2bn.