NEW YORK (Dow Jones)--First Solar Inc. (FSLR) issued a strong 2010 revenue target and announced plans for eight additional production lines at its Malaysian manufacturing center, which will lead to a jump in output by 2011.
Chief Executive Rob Gillette said Wednesday the company would add capacity to meet a demand pool that was becoming less volatile and more predictable than the traditional feed in tariff-based markets.
"We're going to invest in our capabilities," Gillette said at an event to discuss the outlook.
First Solar's shares rose 4.1%, to $142.32 in after-hours trading. Over the past year, the stock is up about 8% amid wide price fluctuations.
The news was the latest sign the solar power industry has seen improvement in recent months, after the industry struggled early this year amid high inventories and weak demand. For instance, on Monday, Chinese solar-cell maker JA Solar Holdings Co. (JASO) said it expected fourth-quarter shipments to exceed the high end of its earlier guidance due to strong global demand.
Still, the market is still expected to remain challenging over the next year, as prices for conventional solar panels sold by First Solar rivals continue to decline.
"We think supply will still exceed demand in 2010," Gillette said.
First Solar, which makes thin-film solar panels that are cheaper but less efficient than traditional silicon-based panels, expects 2010 earnings of $6.05 to $6.85 a share on revenue of $2.7 billion to $2.9 billion. Analysts surveyed by Thomson Reuters, on average, expected $6.55 and $2.41 billion, respectively.
Gross margins for the year are expected to be 38%, with operating margins at 23% to 24%. The company also projected $500 million to $550 million in capital spending.
The expansion in Malaysia, as well as the previously announced two-line factory in France, should add 10 production lines over the next two years, increasing capacity by nearly half from current levels.
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