5N Plus Stocks Drop As First Solar Decreases Supply Order

In the most recent fiscal quarter for 2009, 5N Plus supplied 54% of the cadmium telluride required by First Solar. 5N Plus, however, had previously supplied 74% of First Solar’s cadmium telluride. 

5N Plus manufactures high quality metals for solar power companies as well as the electronics industry, however with First Solar ordering less cadmium telluride this quarter it could mean that the company is looking elsewhere for its metal materials.

Ian Tharp, an analyst for Dundee Capital Markets, has released a report claiming that First Solar has either found a new supplier or has begun drastically cutting down their per-watt cadmium telluride requirements. First Solar had announced in February that the company was able to cut down costs on solar panels to less than $1 per watt. The company is now able to engineer thin-film panels for $0.87 per watt, increasing their earnings and cutting down the cost of manufacture by 6.5% from previous quarters.

The account with First Solar yielded 78% of 5N’s earnings for the last quarter which closed on May 31. If First Solar continues to cut back purchases of cadmium telluride, 5N will be forced to shop around for a larger client base in order to keep their earnings on par with last quarters, which the company reported at $18.11 million in sales. 

5N’s new production plant in Germany will help the company fill orders more quickly. The $18 million facility should help the company catch up with its $52 million backlog, which increased 73% from last year.

When the news hit today that the company may be losing First Solar as a major client, 5N Plus shares fell almost 5% to end today’s period with $6.35.