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First Solar Announces Operation Restructuring on Product Mix and Workforce

published: 2016-11-17 18:25

Global solar industry is transforming – average selling prices drops, conversion efficiency of PV modules increases, and installing costs falls. The market shift has influenced First Solar, U.S.-based CdTe solar panel maker, in aspects from manufacturing to supplying.

Restructuring: job cut and product line conversion

On November 16, First Solar announced to accelerate operation restructuring by cut 1,600 jobs from its 6,000 employees, representing a reduction of approximately a quarter of the whole workforce.

First Solar additionally announced to accelerate production of Series 6 solar panels into 2018, with approximately 3GW of production expected in 2019. The company plans to convert its existing production facilities to Series 6 production and will gradually phase out production of current Series 4 products between 2017 and 2018. Over the conversion course, the Series 5 production will be canceled.

“The acceleration of the Series 6 roadmap is an important development for First Solar,” said Mark Widmar, CEO of First Solar. “Although the decision to accelerate our Series 6 roadmap requires a restructuring of our current operations, we expect the transition to Series 6 will enable us to maximize the intrinsic cost advantage of CdTe thin-film technology versus crystalline silicon.”

Widmar also noted that recent steep module price declines pushes the company to optimize its operation.

The workforce reduction and manufacturing transition will be taken place internationally. As a result, First Solar expects to incur restructuring and asset impairment charges of US$500~700 million, which includes a cash impact of US$70~100 million. The charges are anticipated primarily in 2016.

Negative outlook toward 2017

After incurring the related fees, First Solar is very likely to turn to loss for the full year 2016 with an expected loss per share of US$2~4.

The company revised the 2016 GAAP guidance according to the restructuring and other related charges. While guidance for net sales remains at US$2.8~2.9 billion and gross margin at 25.5~26.0%, First Solar updated operation income (loss) from US$235~255 million to (US$445~210) million. Guidance for EPS has been revised from US$3.75~3.90 to negative US$4~2.

In addition, First Solar expects to reach net sales in 2017 at US$2.5~2.6 billion and gross margin at 12.5~14.5%, both down from the 2016 guidance. Non-GAAP would be at US$0~0.5 for 2017.

First Solar also reduces its module shipment target to China by 2020 from 20GW to 9GW, in response to decreasing demand and falling module selling prices in that market.

(Photo credit: First Solar)

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