Analyst: Disconnect between module shipments “vanity,” profit “sanity”

With demand set to wane from current levels, PV module suppliers would do well to keep a focus on their sales and profit numbers, and not so much megawatts or gigawatts of installations.

November 17, 2010 – With demand set to wane from current levels, PV module suppliers would do well to keep a focus on their sales and profit numbers, and not so much megawatts or gigawatts of installations, advises IMS Research’s Sam Wilkinson, in a report.

Module shipments are on pace for 65% growth in 2010 to >16GW, but shipments should slow to <20% in 2011 due to reductions in incentives (see Germany) and the backside of the demand pull-in that has helped bump up 2010 numbers, Wilkinson writes. Combine that with declining prices and PV module sales may actually decline in 2010, depending on how harsh the environment is in 1H11.

The contrast between shipments and sales is a problem, he notes. Module shipments in MW have grown an average 60% over the past two years, vs. just 13% growth in revenues — and the industry has a tendency to applaud the former a little too much, and neglect the latter. “The industry has a dangerous tendency to only focus on MWs and GWs or capacity and shipments, rather than revenues and margins,” he writes. So it was in 2009 as well when module shipments spiked in the second half of the year, and overall MW shipments increased >50% — but sales actually decreased because of rapid price declines through most of the year.

“As the industry prepares to enter a period of softening demand and decreasing prices, suppliers will need to concentrate on growing revenues and profits and not just focus on who’s shipping the most MWs,” he advises.

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