FirstSolar’s Acquired Technologies Keeps Finances Ahead of Pack in 2Q

published: 2013-08-20 10:16 | editor: | category: Analysis
FirstSolar’s good profit capacity and financial health has always been ahead of others in the photovoltaic industry. The company’s financial performance in 2Q was no exception. The company’s 2Q financial results announced on Aug. 7, 2013 showed maintenance of healthy financial structures as current ratios were kept at 1.94, quick ratio of 1.76, and asset-to-debt ratio was 39%. The company reported an increase in gross profits from 22.4% in 1Q to 27% in 2Q, due to diversified system integration projects and lowered costs. However, net revenue declined 31% from US$ 755million in 1Q to about US$ 520 million in 2Q, while net income plunged 43% from US$ 59.14 million last quarter to US$ 33.60 million in 2Q. The falls in net revenue and net income was caused by decreased earnings from projects and lowered module sales.
FirstSolar has been the leader in the field of thin film as it continues place emphasis on the obtainment of core technologies. The company’s acquisitions in 2013 are further evidence of this strategic implementation. FirstSolar successfully acquired Tetrasun in May this year, and Tetrasun’s n-type solar cell’s conversion efficiency has reached 21.4%, about 3% above industry average. These have allowed FirstSolar to grasp the latest thin film technology and advanced silicon technology. However, thin film solar cells are not suitable for residential and small commercial systems market. With the current market gradually turning towards residential power system applications, the company’s acquisitions can be viewed as advanced tactics to meet market change. And products using this technology  are expected to be launched in Japan.
FirstSolar’s second acquisition this year was in the form of its partnership with General Electric Company (GE). The two companies signed a technology and business cooperation agreement. In the agreement, First Solar used 1.75 million stock shares in exchange for full acquisition of GE’s Cadmium Telluride (CdTe) Photovoltaic’s  intellectual property rights. GE’s CdTe conversion rate of 19.6% is 1% higher than First Solar’s 18.7%. FirstSolar believes the two companies’ complimentary technology and its insistence on manufacturing capacity will effectively raise product conversion rates during mass scale production.
At the same time, FirstSolar announced in the Conference Call a new technology accomplishment—its Series 3 Black module became the first in the world to pass thin film module Thresher and Long Term Sequential Test—and average conversion efficiency rates increased to 13%. According to statistics in the past, FirstSolar’s module conversion efficiency rates in 2010 were 11.4%, 11.7% in 2011, and 12.7% in 2012. The company expects conversion rates to reach 14% in the next four quarters, and its average conversion rate is nearing si-base modules.
FirstSolar’s utilization for 2Q was the same as 1Q, while module production costs were lowered from US$ 0.69/W last quarter to US$ 0.67/ W in 2Q. FirstSolar has maintained its advantages in the industry with lowered costs, improved efficiency and high capacity utilization.
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