New Hampshire, USA -- American-based thin-film giant First Solar saw its profits take a steep hit in the second quarter behind market uncertainty in Europe. But on Thursday, the company said it expects a strong second half of 2011 fueled by growing markets in the U.S., India, China and Japan.
The company saw its earnings drop to $61.1 million through June 30, 2011 from $159 million in the same quarter of last year. First Solar's net sales were $533 million in the quarter, a decrease of $34.5 million from the first quarter of 2011, which the company attributed to lower average selling prices as policy uncertainties in Italy, Germany and France adversely impacted demand in the second quarter. Quarterly net sales decreased from $588 million in the second quarter of 2010. First Solar (FSLR) was trading as low as $103 a share by early morning on Friday, down from its 52-week high of $175.45 in February.
The company said Thursday that it is now looking to growing markets to help it meet projections for the remainder of the year.
"Our North American business has grown from 17 percent to 25 percent of megawatt shift and is expected to be our No. 1 market in 2012," said First Solar CEO Rob Gillette during Thursday's earnings call. "In India, supportive policies and new local partners are driving strong growth, and we expect India to account for more than 10 percent of our megawatts this year. Our North American pipeline and new markets like India are helping to offset European market uncertainties, and both are expected to be multi-gigawatt, sustainable markets. In the second quarter, North America and India combined represented almost 50 percent of our revenues."
Gillette pointed to an analyst survey that projects the 2011 market to grow to 19.8 gigawatts, up 19 percent from 2010. The analysts also see a compound growth rate of 12 percent from 2010 to 2013 as others markets - mainly North America, India, China, Japan and the Middle East - take up some of the volume traditionally reserved for the European market.
Here is how the company views its role in global markets, according to Gillette.
"In France, First Solar and our partners are realizing 250 megawatts of projects in 2011. Now we have a clearer picture in Italy, Germany, France and the U.K., but the new policies have created a more challenging operating environment."
"The German market is recovering from a slow start and appears to be ramping towards around four to five gigawatts in 2011. The recent EEG decision provides good long-term visibility, and we are well-positioned as at the German manufacturer."
"In Italy, the market is adjusting to the new [Conto Energia] published in May and is recovering from a policy interruption in the first half. Demand is improving and is expected to be two to three gigawatts in 2011."
"The North American market should double to more than two gigawatts this year. In California, over one gigawatt of RFOs were issued for the 2011 cycle to comply with the 33 percent RPS requirement. Over time, the requirement for government subsidies may decline as ROEs or early adopters do the same."
"In China, the government is in the process of developing a longer-term plan for the market, with the potential to increase their 2020 goal from 20 to 50 gigawatts. China recently announced the new national FiT with the potential to provide sustainable economics at 1.15 RMB per kilowatt hour. We continue to see strong momentum in India. The market is expected to grow to about 500 megawatts in 2011."
"In Australia, we were unfortunately not selected for the first phase of the Solar Flagship's program but remain well-positioned for the second phase. Solar growth will be strongly supported in the future by the recently announced national carbon legislation, which has committed to invest $10 billion in non-wind large-scale renewables and to the implementation of state solar programs targeting utility-scale projects."
"In Southeast Asia, we see encouraging signs of early-stage development in Thailand, Indonesia, Malaysia and the Philippines."
"We see great potential in the Middle East. There are challenges facing oil-exporting countries with rapid growth in domestic energy needs ... tenders for utility-scale projects are underway and we expect to see more robust renewable policies that could drive a several-hundred-megawatt market in just a few years."