Despite Module Glut, First Solar Expects Brighter 2010

First Solar (s FSLR), the thin-film module manufacturer that has seen increasing price pressure from polysilicon makers, remains confident about its prospects for next year, according to a conference call with investors Wednesday.

First Solar expects revenue in 2010 to come in between $2.7 billion and $2.9 billion, compared with the consensus figure among analysts of $2.4 billion. Diluted earnings per share will reach between $6.05 a share and $6.85 a share, versus the consensus number of $6.55 a share. First Solar estimates gross profit in 2010 will be around 38 percent of revenue and operating profit will be between 23 percent and 24 percent.

Shares of First Solar, which closed down 1.6 percent at $136.74 in active trading Wednesday, was trading as much as $5.6 percent higher at $1.44 in after-hours trading. It plans to invest between$500 million to $550 million on capital spending.

Gillette expressed cautious optimism about next year, saying that demand should improve in Italy, France and Spain, as well as among California utilities. That demand is rising at a time when inventories remain low and liquidity is improving in distribution sales channels. Overall, market demand will increase by 35 percent a year through 2012, he said.

“2010 will be stronger than 2009, although there are some question marks remaining,” including the uncertain demand in Germany. In addition, the supply of solar modules will exceed the demand for some time, which will pressure down prices.

First Solar CFO Jens Meyerhoff said the oversupply of polysilicon will keep prices between $40 per kilogram and $50 per kilogram in 2010. First Solar’s thin-film modules are less efficient than polysilicon, and appeals to customers with lower prices. So the plunge in polysilicon prices is pressuring thin-film prices down. Meyerhoff said First Solar’s guidance factors in its work to compete against falling polysilicon prices.

Gillette said First Solar is reacting to uncertainty in Germany by expanding into North America and China, while pushing into new markets such as Australia and Germany India. The company is on track to add new production capacity in Malaysia and France, as well as a new site that the company will announce by the end of the year, he said.

Image courtesy of First Solar.