SunPower Loss Widens on Cheaper Panels, Sees 2013 Rebound

SunPower Corp., the second-largest U.S. solar manufacturer, said slumping prices for photovoltaic panels contributed to a wider loss in the fourth-quarter and will pull down sales this quarter. That’s also helping the company sell projects that will generate at least $3.5 billion in revenue in the years to come.

The fourth-quarter net loss widened to $144.8 million, or $1.22 a share, from $93 million, or 94 cents a share, a year earlier, San Jose, California-based SunPower said yesterday in a statement. The company was expected to lose 78 cents a share, the average of four analysts’ estimates compiled by Bloomberg. Sales increased 8.5 percent to $678.5 million.

SunPower and its competitors are contending with a global oversupply that pulled down panel prices industrywide by 31 percent last year to 64 cents a watt. The price point is boosting demand for solar power, and the company has a pipeline of about 1 gigawatt of projects, according to Chief Executive Officer Tom Werner.

“Our pipeline of booked projects is quite strong,” Werner said in an interview. “Three to four years out can we compete with conventional energy sources with no or minimal incentives? The answer is yes.”

North America accounted for 80 percent of sales in the quarter, up from 63 percent a year earlier, and is the company’s most important market, Werner said. That includes Antelope Valley, a pair of solar farms that will have 579 megawatts of capacity, that Warren Buffett’s MidAmerican Energy Holdings Co. agreed to buy last month.

Future Revenue

MidAmerican expects to spend as much as $2.5 billion on the two solar farms, which may be complete by the end of 2015. SunPower expect at least $3.5 billion in revenue from fulfilling its current orders over the next several years. Long-term visibility “gives us confidence that 2013 will be a much stronger year,” Werner said in the statement.

The company produced 153 megawatts of panels in the quarter and 936 megawatts in all of 2012.

It expects to produce 150 megawatts to 170 megawatts in the current quarter. Revenue will be $450 million to $525 million and the per-share loss will be 60 cents to 85 cents.

Total 2013 revenue will be comparable to the $2.4 billion reported for last year, Werner said on a conference call with analysts.

The company will continue to cut costs to counter panel prices that will continue to decline, according to Chief Financial Officer Charles Boynton.

“For the year, we saw costs per watt fall faster than our average selling prices,” Boynton said on the call, without providing SunPower’s panel prices. “We still see significant opportunity to reduce both panel and balance of systems costs into 2013 and beyond.”

Thin Margins

The company has “markedly high fixed cost structure and, therefore, razor-thin operating margins and profitability,” Pavel Molchanov, a Raymond James & Associates Inc. analyst in Houston, said in a Jan. 8 research note. Molchanov has the equivalent of a sell rating on the company.

SunPower, which is majority-owned by French oil company Total SA, had a charge of $39.6 million in the quarter mostly for a restructuring plan announced in October. Boynton doesn’t anticipate further restructuring.

First Solar, the largest U.S. solar panel manufacturer, produced 1.36 gigawatts of panels through the third quarter and said Nov. 1 that it expected to ship 1.2 gigawatts of panels for the year.