First Solar’s Components Segment Offsets Fall in Systems Revenue

Alexis Tate - Author

Oct. 2 2017, Published 6:11 p.m. ET

Revenue trend

First Solar’s (FSLR) revenue is primarily from turn-key projects, project maintenance, project sales, PV (photovoltaic) module sales to third parties, and PPAs (power purchase agreements) for sale of electricity. In this part, we’ll examine First Solar’s financial performance.

As we discussed previously, First Solar has two main business segments: Components and Systems. The design, production, and sale of photovoltaic modules are managed by the Components segment. It also fulfills the PV module requirements of the Systems segment, which takes care of all other activities. Its competitiveness in thin-film technology distinguishes First Solar from solar (TAN) module manufacturers Yingli Solar (YGE), Trina Solar (TSL), and JA Solar (JASO).

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In 2016, First Solar reported total revenue of $3.0 billion, 18% lower than its revenue of $3.6 billion in 2015. The decline in revenue was primarily due to the sale of majority interests in two projects in 2015, the completion of construction of two projects in 2015 and early 2016, and lower revenue from “module plus” transactions. The fall was partially offset by the commencement of construction of two projects in the second half of 2015 and one project in early 2016.

Systems segment

First Solar’s Systems segment reported $1.5 billion in revenue in fiscal 2016, 33% lower than the $2.2 billion it saw in fiscal 2015 and 36% lower than the $2.3 billion it saw in fiscal 2014. The fall was primarily due to the sale of interests in two projects and the completion of construction of several projects.

Components segment

Revenue from the Components segment comprises module sales to the Systems segment and third parties. A fall in Systems revenue was offset by higher Components revenue.

The Components segment reported revenue of $1.5 billion in fiscal 2016, 7% higher than $1.4 billion it saw in fiscal 2015, and 35% higher than the $1.1 billion it saw in 2014. Revenue increased in 2015 and 2016, primarily due to an increase in the volume of watts sold. This increase was partially offset by a drop in the average selling price per watt.


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