TEMPE (dpa-AFX) - First Solar Inc. (FSLR) said Tuesday that it will close its manufacturing plant in Germany and indefinitely idle four production lines at its plant in Malaysia, as part of its efforts to reduce costs amid deteriorating market conditions in Europe. The restructuring will reduce the solar panel maker's global workforce by approximately 2,000 positions, or about 30 percent of the total.
The Tempe, Arizona-based company said it will close its manufacturing plant in Germany in the fourth quarter of 2012. The company will also indefinitely idle four production lines at its manufacturing center in Kulim, Malaysia, on May 1, 2012.
Mike Ahearn, Chairman and Interim CEO of First Solar said, 'After a thorough analysis, it is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable, and maintaining those operations is not in the best long-term interest of our stakeholders.'
First Solar expects the restructuring initiatives to reduce its costs by $30 million to $60 million this year, and $100 million to $120 million annually going forward.
First Solar will record restructuring and other related charges of $245 million to $370 million, of which $80 million to $120 million are cash expenditures. This includes asset impairment expenses of $150 million to $250 million, primarily related to the Frankfurt plants.
First Solar expects to incur these charges primarily during the first quarter of 2012 and the rest over the course of the year.
In addition, the company has voluntarily paid down approximately $145 million of debt ahead of schedule in 2012, which represents repayment in full for outstanding amounts under the company's German loan agreement.
The company expects its average manufacturing cost to improve to $0.70-$0.72 per watt in 2012 as a result of the changes, but below prior expectations of $0.74 per watt. In 2013, the company estimates average module manufacturing costs will range from $0.60 to $0.64 per watt.
First Solar, which makes thin film photovoltaic modules, has been battling hostile market conditions for some time. Last December, the company's stock sank after it slashed its 2011 outlook, citing delays of certain projects in its systems business.
In late February, the company reported a loss for the fourth quarter, hurt mainly by lower than expected sales of solar modules and hefty one-time charges. At that time, the company trimmed its revenue outlook for the full year 2012, indicating that tough market conditions continued to prevail.
CEO Ahearn said that stiff competition, an uncertain regulatory environment, and restructuring and other charges pulled First Solar into the red.
In Tuesday's regular session, FSLR is trading at $20.79, down $0.03 or 0.15 percent on a volume of 3 million shares.
Copyright RTT News/dpa-AFX