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February 12, 2013Sunpower (SPWR) which is the 2nd largest US solar company after First Solar (FSLR) was the first major company to report 4Q12 results. As expected the company was in the red, however the quantum of losses were much more than what analysts were expecting. The company in its defence said that it had 1 GW of solar projects in the backlog and that it expected 2013 sales to be flat with 2012. However the company shipped only 1 GW of modules in 2012, which means that its global market share has reduced to only 3% now. The company makes the highest efficiency crystalline silicon solar modules, however its manufacturing costs are much higher than its competitors.
The stock has seen a major rally after two of its big ground mounted solar projects were bought by Buffet owned MidWestern Energy. The company is majorly owned by French oil giant Total, so the company does not face bankruptcy issues like other western manufacturers. The company is very strong on the downstream side of the business and gets a lot of revenues from system installation and integration. The company has survived through very tough times and should see this down cycle through. However, we are not sure of its profitability unless the company can make major breakthroughs. The company should benefit from the global solar trade wars especially if Europe follows the US lead in imposing duties on imports of Chinese made solar cells and panels.
Read more about Sunpower Solar Panel Review of Trackers, Solar Tiles, Warranty, Specifications and Prices.
Black Sunpower Tuesday
Sunpower had announced 900 job cuts as it closed down 6 of its 12 solar cell lines at its Phillipines factory. Note Sunpower had already closed down its Fab 1. Sunpower which makes the highest efficiency solar power panel, has much higher costs than other crystalline solar panel producers. This is making its going tougher despite the backing of its parent – the French oil and gas giant Total. The CEO of Total had said in an interview that Sunpower would have been in Chapter 11 by now without Total’s acquisition.
Sunpower is surviving due to its big parent Total. Note the CEO of Total was candid enough to say that Sunpower would be facing Chapter 11 without its support. Total just increased stake in Sunpower as the company continues to make losses. Sunpower has a high cost structure which in these times mean you are dead. Even the most cost efficient companies in the West like First Solar faces survival questions. Sunpower with its high cost and high efficiency solar panels would have been dead by now. Note Sunpower has a bad balance sheet, contorted accounting (already faced a scandal).
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. 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. 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.