July 29 (Bloomberg) -- First Solar Inc., the world’s biggest maker of solar power modules, said second-quarter profit fell as panels were held for use on its own projects, reducing sales to customers, and as the euro declined against the dollar.
Net income fell to $159 million, or $1.84 a share, from $180.6 million, or $2.11 a share, a year earlier, the Tempe, Arizona-based company said today in a statement. Profit was expected to be $1.603 a share, the average of 26 analyst estimates compiled by Bloomberg. Sales increased to $587.9 million from $525.9 million.
In Europe, First Solar’s largest market, a 6.6 percent decline in the euro versus the dollar for the quarter decreased the value of sales there. Partly to reduce reliance on revenue from Germany and Italy, the company has been shifting more modules to projects it’s developing for utilities in the U.S. and Canada.
“They are ramping up their utility-scale projects in a major way,” said Daniel Ries, an analyst at Collins Stewart in New York. He has a “buy” rating on the shares. “With three larger projects under way they’ve begun to hold back the modules they need, and that’s a temporary drag on revenue.”
First Solar fell $3, or 2.2 percent, to $132.50 as of 5:26 p.m. in late trading on the Nasdaq Stock Market. By the close of regular trading today, the stock had decreased 19 percent in the past year.
First Solar began replacing some modules that were made from June, 2008 to June, 2009 because of “premature” declines in power output, Chief Executive Officer Rob Gillette said on a conference call. The company has accrued $27.4 million for the replacement of about 30 megawatts of modules.
Sales in the U.S. are climbing as utilities seek to comply with renewable energy requirements in California, New Jersey and Texas. New factories in Malaysia, France and Ohio will increase annual production capacity to 1,800 megawatts, up from the 1,100 megawatts produced in 2009, First Solar said in June.
“We believe that exposure to the euro will be significantly less in 2011 given First Solar’s pipeline of North American-based projects,” said Mark Bachman, an analyst at Auriga USA in New York who has a “buy” rating on the shares.
Increased throughput has helped reduce manufacturing costs to 76 cents per watt from 81 cents in the first quarter, and will help boost annual production capacity to as much as 2,200 megawatts by 2012, the company said.
(First Solar scheduled a conference call with analysts and investors at 4:30 p.m. in New York. To listen, go to the company’s web site at http://www.firstsolar.com)
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