The current solar market conditions are "unsustainable" stated Renewable Energy Corporation (REC) CEO, Ole Enger, who added that spot market prices are now sitting at below cost for "all market participants." And, while demand is growing internationally, he continued, it is not enough to make up for the slowing of demand in Europe.
In reporting its Q3 2012 financial results, the company, which closed down the last of its Norwegian photovoltaic operations this year, announced that it had temporarily halted production of its ingots and blocks in Singapore. Blocks will be sourced from third parties, it said, declining to disclose how long production would be offline.
Having improved on Q2, Q3 2012 net loss decreased from NOK 3.7 billion (around US$644 million, 497 million), to NOK 452 million, and was also up on Q3 20122, which saw a loss of NOK 759 million. Despite this, revenues were down, from NOK 1.9 billion in Q2, and NOK 2.4 billion in Q3 2011, to NOK 1.5 billion.
Q3 2012 EBITDA took a particular tumble, falling from a positive NOK 267 million in Q2 and NOK 503 million in Q3 2011, to a very negative NOK -184 million. EBIT, on the other hand, was NOK -451 million, up from NOK -3.7 billion in Q2, which saw impairment charges of NOK 3.6 billion, but down on Q3 2011s EBIT of NOK 69 million.
In terms of its polysilicon business, REC said average selling process (ASPs) were sequentially down 10%, leading to average spot market prices of around US$18.5/kg. In Q3 2012, it sold around 4,800 MT, compared to 4,851 MT in Q2 and 4,016 in Q3 2011.
Photovoltaic module ASPs also dropped by around 10% from Q2, with current spot market prices at around $0.69/W. For the quarter, the company recorded modules sales of 170 MW. It added that total production is up 23% in Singapore and via contract manufacturing, which was initiated based on strong demand at the start of the quarter.
Overall, REC said it reduced its net debt in Q3 by NOK 2.2 billion to NOK 1.9 billion. "The debt reduction mainly reflects new equity of gross NOK 1.7 billion and a positive effect of the insolvency of REC Wafer Norway AS of NOK 0.4 billion. With the insolvency, REC recognized a net gain of NOK 0.8 billion as part of discontinued operations in the consolidated statement of income," it explained in a statement released. The company has a nominal debt of NOK 4.5 billion.
Looking ahead, REC expects to record a negative net cash flow from operating activities in Q4 2012. It further forecasts polysilicon production to reach 5,500 MT (21,500 MT for the full year); and module production of around 190 MW (750 MW for the full year).
Despite the current difficult market conditions, Ole Enger is convinced of the attractiveness of solar, and its strong, positive future. "Together with our partners we will weather the current industry turmoil and capture the opportunities that lie ahead," he said.
In related news, the company has announced that Engers CEO position has been extended until July 2014. Meanwhile, current EVP and CFO, Bjørn Brenna will be replaced by Kjell Christian Bjørnsen. Finally, John Andersen, Jr., EVP & COO will retire from his position at the end of the year.