REC: Revenues down 24%, but overall losses significantly lowered


REC posted falling revenues of NOK 1,278 million (US$ 216.7 million) in Q1 2013, while in Q1 2012 it reaped NOK 1,960 million (US$332.3 million). Compared to Q4 2012, revenues were down 24% from NOK 1,687 million (US$285.9 million).

Despite this, a significant sequential improvement was registered with respect to losses after tax, from NOK 2,170 million in Q4, to NOK 209 million. Q1 2012 also saw a loss of NOK 209 million.

In terms of EBITDA, there was an impressive increase, from negative NOK 37 million in Q4 2012, to NOK 46 million in Q1.This was still down, however, on the NOK 314 million achieved in Q1 2012. EBITDA margin, meanwhile, was 4%, up from -2% in Q4 2012, but down from the 16% achieved in Q1 2012.

While Q1 2013 EBIT remained negative, it also showed improvement on the last quarter of 2012, having grown from negative NOK 3,283 million, to negative NOK 159 million. In comparison, Q1 2012 recorded an EBIT of negative NOK 72 million. EBIT margin was also on the same trajectory, at -12% in Q1, compared to -195% in Q4 and -4% in Q1 2012.

According to the Norway-based company, Q4 2012 revenues and EBIT were impacted by positive items of NOK 80 million in REC Silicon, while in the first quarter 2013 other income of NOK 115 million from termination and settlement of parts of a silane gas contract was recognized. "The underlying EBITDA improvement from the previous quarter in the operations of REC Solar was partially offset by weaker results in REC Silicon," it added.

Overall, REC experienced an increase in demand for solar panels in Q1 2013, compared to the second half of 2012. Its current business strategy is based on moving sales away from "stagnating" European markets to "high growth" regions in Asia, according to Ole Enger, CEO of REC. However, he said that oversupply is still excessive and significant growth or reduction of supply is needed to help stabilize prices in the future.

Sales and production volumes were reduced in the first quarter after temporary capacity shut downs in REC’s Silicon and Solar businesses. REC Silicon lowered its production to 4,486MT in Q1 2013, compared to 5,047MT in Q1 of 2012. Meanwhile, REC Solar reduced its production volume 11% from in 191MW in Q4 of 2012 to 170MW in Q1 2013.

The company’s selling prices for solar panels were down 4% from the previous quarter to US$0.68. Meanwhile, average blended polysilicon prices declined 9% to 18 US$/kg, mainly due to reduced prices and sales volume of electronic grade polysilicon. In April of last year, REC closed its last multicrystalline wafer plant in Norway.

Basic EPS from total operations was negative NOK 0.10 in the first quarter 2013, compared to negative NOK 1.03 in the previous quarter. REC's cash position improved by NOK 0.1 billion to NOK 2.0 billion.


With respect to the current anti-dumping proceedings against photovoltaic imports from China to the EU, senior vice president Sales and Marketing at REC Solar Luc Graré told pv magazine, "REC is against the introduction of punitive duties. Nonetheless, we think that the EU Commission will most likely impose temporary duties of between 10 and 60% to Chinese imports at the beginning of June. However, we cannot assume that they will be retroactive."

In addition, he added, the fact that REC is not a Chinese manufacturer means that the company will benefit from the import duties.

At the same time, these developments could affect the price of modules by making them rise slightly, Graré predicted. But he also expects module capacity to fall in Europe.

In terms of the upcoming quarters, Graré believes there are chances for a turnaround. REC’s financial basis is solid. The company’s is already well-positioned in non-European markets, he said.

Overall, REC aspires to fill the gap left by Bosch’s exit from the photovoltaic business, continued Graré. However, the company has no interest in buying Bosch’s plants, nor Aleo Solar’s shares, he concluded.

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