Nov. 2 (Bloomberg) -- SunPower Corp. and First Solar Inc., the largest U.S. solar manufacturers, are boosting efforts to expand in new markets as slowing demand in mature regions pulled down third-quarter revenue.
First Solar sales declined 17 percent to $839 million from a year earlier as the Tempe, Arizona-based company completed or slowed construction on some large solar farms in the U.S., according to a statement yesterday.
SunPower sales fell 8 percent to $649 million as revenue in the Europe, Middle East and Africa region slumped 70 percent, largely on weak demand in Europe.
Government support for solar power is waning in Europe and the U.S., and the two companies are pursuing projects in other regions to compensate for slowing sales, said Ben Kallo, an analyst at Robert W. Baird & Co. in San Francisco.
Both companies are “moving away from subsidized markets and into markets that are more sustainable,” including Africa, Australia and India, Kallo said in an interview.
SunPower, based in San Jose, California, expects sales to grow in Africa and the Middle East, while “the European market continues to be challenging,” Chief Executive Officer Tom Werner said on a conference call yesterday.
Shipments to Japan increased 30 percent from the prior quarter, and the company also anticipates growth in China, India and Australia, he said. “We are also starting to monetize our project pipeline in Israel,” Werner said.
First Solar’s Chief Executive Officer Jim Hughes, hired in May, is seeking to expand in some of the same regions. The government of Dubai selected the company in October to build the country’s first solar farm, a 13-megawatt project that’s expected to be the initial phase of a $3.3 billion initiative.
First Solar is seeking to supply 20 percent of India’s panel market and agreed in June to build Australia’s two biggest photovoltaic projects. The company also sees Thailand and Indonesia as growing solar markets.
Both companies are building large solar farms in the Southwest U.S., and need to develop new sales channels to replace revenue from projects that will eventually be completed, said Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston.
First Solar completed its 50-megawatt Silver State North solar farm in Nevada in the second quarter and slowed construction on its 290-megawatt Agua Caliente project in Arizona in the third quarter. It cited both as reasons for its falling sales, according to the statement.
“U.S. projects are well under way -- the end of many of those is within sight,” Molchanov said in an interview. The company is “profitable now, but the backlog is being depleted.”
First Solar’s net income was $87.9 million, or $1 a share, compared with $196.5 million, or $2.25, a year earlier. The company was expected to earn 87 cents, the average of 15 analysts’ estimates compiled by Bloomberg.
SunPower’s sales in the Americas increased 36 percent to $502.3 million, driven by its 601-megawatt Antelope Valley project and the 250-megawatt California Valley Solar Ranch project, according to a statement yesterday.
The company, majority-owned by Total SA, reported a loss of $48.5 million, or 41 cents a share, from $370.8 million, or $3.77 a share, a year earlier. The company was expected to lose 21 cents a share, the average of eight analysts’ estimates compiled by Bloomberg.
The company produced 227 megawatts of panels in the quarter, compared with 272 megawatts a year earlier. Global prices for solar panels declined 29 percent in the last 12 months to 76 cents a watt.
Eventually, revenue from the large projects will end, and new sales will probably be at lower prices, Christopher Blansett, an analyst at JPMorgan Chase & Co. in San Francisco, said in an interview. SunPower and First Solar are both “living off of borrowed time.”
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