REC reports dreary financial results; outlines 2012 goals


Having been significantly affected by the weak market conditions of 2011, REC announced a string of plant closures and production cutbacks throughout the year.

Most recently, it made public the temporary halt to its wafer production in Glomfjord, Norway throughout the first quarter (Q1) of 2012. On the back of this, and the temporary halt to 60 percent of its production at the 650 megawatt (MW) multicrystalline wafer facility in Herøya, the company expects to produce approximately 105 MW of multi- and mono- crystalline wafers in Norway in Q1.

Looking at Q4 2011, REC reported revenues of NOK 2.8 billion (around €375 million; US$497 million), down from NOK 3 billion in Q3. At NOK 178 million (Q3: NOK 370 million), EBITDA was also significantly affected by both "aggressive" polysilicon pricing and its plant closures.

"Affecting EBIT," continued the company in a statement, "REC recognized a further NOK 2.5 billion impairment on fixed assets of the Singapore operations in the quarter." Overall, Q4 EBIT, before impairment charges, was NOK -288 million, compared to negative NOK 98 million in Q3 2011. Loss from total operations, meanwhile, was NOK 2.4 billion in Q4, compared to a loss of NOK 759 million in Q3.

Furthermore, the solar company says that compared to Q3, its average selling prices for polysilicon were down 42 percent, while wafer prices were down 31 percent and module prices were down 15 percent.

REC did manage to reduce its net debt by NOK 0.6 billion in Q4 2011, to NOK 4.7 billion. It additionally recognized income of NOK 690 million from terminations of wafer sales contracts. This was partly offset, however, by costs of NOK 335 million related to permanent shutdown of the cell production, and approximately 50 percent of the wafer production capacity in Norway.

It ended the quarter on a positive note though, remarking that investments in photovoltaic systems are currently yielding favorable end-user returns in a number of markets. And, after a slow start, demand for solar modules seems to have improved at the very end of Q4.

For the full year, revenues fell three percent from 2010, to hit NOK 13.3 billion. EBITDA also recorded negative growth, having declined from NOK 3.5 billion in 2010, to NOK 2.8 billion in 2011. Meanwhile, after impairments, REC’s 2011 EBIT took a massive tumble, from NOK 1 billion in 2010, to NOK -9.45 billion.

Finally, loss from total operations amounted to NOK 10 billion, compared to a profit before tax of NOK 989 million in 2010.

Looking ahead to 2012, the company says its priorities include focusing on cash flow and restructuring its production capacity in Norway. It is also looking to "aggressively" increase its polysilicon market share and plans to produce eight percent more silicon in 2012 than in 2011. Furthermore, the company wants to hit an average multicrystalline cell efficiency of 18 percent.

In terms of Q1 2012 targets, the company hopes to produce around 5,000 MT of polysilicon, 105 MW of multi- and mono- crystalline wafers, and 160 MW of photovoltaic modules. For the full year, it hope to manufacture a total of 20,500 MT of polysilicon, as aforementioned, and around 750 MW of modules. It has not released a full year target for its wafer production, however.

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