REC confident despite recording significant Q2 EBIT loss

In reporting its Q2 2011 results, Norway-based Renewable Energy Corporation ASA (REC) has recorded revenues slightly below those achieved in the same period last year, at €65 million. The photovoltaic industry is suffering from existing overcapacity and price pressures, Luc Grarè, senior vice president of sales and marketing, cells and modules, told pv magazine, which along with the complete closure of the company’s wafer production facilities in Norway has impacted revenues.
Added to the aforementioned pressures are the falling prices of polysilicon and modules, said REC. Its selling prices were said to be down by eight percent in Q2. Grarè added that the company’s EBIT has been considerably impacted by impairment charges of its fixed assets in Singapore "based on revised external views on future prices". The EBIT loss for the quarter was said to be around €494 million, of which €482 million was "primarily related" to its Singapore facility. Despite this, Q2 net debt has been reduced to around €547 million.
In terms of its photovoltaic modules, REC posted "record" sales of 216 MW. For the full year, the company expects around 750 MW of modules to be sold, which is said to be the equivalent to the full utilization of its factory in Singapore. The company is further on track to return to profitable module sales, said Grarè, due to further cost reductions in material and cell purchases.
Above all, REC said the U.S. market and those in the Asia-Pacific region are important for the future. However, there are still said to be attractive business opportunities in Eastern Europe and Germany.
A few weeks ago, REC announced the reorganization of its financial structure. Commenting, Grarè said the move had been very successful. Under the reorganization, the company received a loan from a Norwegian bank totaling more than €267 million.
Additionally, it collected around €175 million via the issuance of new shares under the existing shareholders. They have been oversubscribed two-fold, which is a strong sign of shareholder confidence, he continued. By the end of September, an additional around €50 million is expected to be collected upon the further issuance of new shares.
Overall, REC is said to be in a very robust position in 2012/2013. The company is very well set up for the consolidation period, added Grarè. The next bank loan and convertible bonds are due in 2014. An attempt by REC to repurchase these, as part of the reorganization of its finances back in July failed to secure the majority vote of its bondholders.
Translated and edited by Becky Beezt.