First Solar’s Ahearn Accelerates Cost-Cuts as Panel Prices Drop

Nov. 3 (Bloomberg) -- First Solar Inc., the world’s largest maker of thin-film solar panels, postponed plans to complete a factory in Vietnam to accelerate technology improvements in existing production lines and reduce costs.

Chairman Michael Ahearn, who stepped in as acting chief executive officer last week and cut sales and profit guidance, said panel efficiency rose to 12.4 percent on some manufacturing lines. At that conversion rate, First Solar can produce panels at a cost of less than 70 cents a watt, he said today during a conference call with analysts.

The reductions may help First Solar retain a cost advantage as China’s manufacturers reduce prices to unload inventories in an oversupplied market, said Hari Chandra Polavarapu, an analyst at Auriga USA, who has a “buy” rating on First Solar.

“I want to see them apply it across all lines,” he said in an interview.

During the third quarter, average panel efficiency increased to an average 11.8 percent from 11.7 percent in the prior quarter, the Tempe, Arizona-based company said today in a statement. First Solar’s cost per watt, the lowest in the industry, declined to 74 cents from 75 cents. The company has achieved efficiency rates of 17.3 percent in lab.

Ahearn also plans to shift spending away from new factories and will focus on sales in new markets where demand is increasing for solar energy, such as India and the Middle East.

“Building more factories absent this type of demand creation does not lead to growth,” Ahearn said. He’s begun “a slowdown in new factory expansion until new sustainable market demand develops.”

First Solar rose 2.4 percent to $49.35 as of 6:51 p.m. in late trading in New York. They had declined 63 percent this year.

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