REC Silicon narrows loss


Norwegian group REC Silicon on Wednesday presented an optimistic outlook after narrowing its annual loss by 73% to NOK 940 million ($154 million) last year.

The company, which presented figures for ongoing operations following the sale of its REC Solar division in October, posted a 20% drop in annual revenue to NOK 2.45 billion ($399 million).

REC Silicon's fourth-quarter revenue in 2013 reached NOK 743 million, down 1.7% from the same period in the previous year. The company’s loss in the final three months of 2013 shrank from more than NOK 2 billion to NOK 28 million.

REC Silicon CEO Tore Torvund expressed satisfaction at the newly structured group’s performance and pointed to the company’s EBITDA figure — NOK 164 million in the fourth quarter, up from NOK 17 million the previous year — as a measurement of the company’s health.

"I am pleased that our efforts to improve quality and reduce cost continue to strengthen our competitive position. Together with slightly increased demand for solar polysilicon, these efforts have led to an improvement in REC Silicon ASA's EBITDA in the last quarter," Torvund said.

The Norwegian group’s core manufacturing facilities are based in the United States and represent the company’s continuing operations. REC Silicon said that polysilicon demand continued to strengthen and prices continued to increase despite the introduction of anti-dumping duties on solar grade polysilicon imported to China.

The company’s polysilicon sales volumes decreased by 13% in 2013 to approximately 19,000 metric tons compared to 2012. The group’s average annual selling price for Siemens and granular polysilicon declined 15% from 2012 to 2013.

While polysilicon prices were down at the beginning of 2013 due to overcapacity, improved demand for solar panels later in the year led to higher polysilicon demand, "which in turn lifted average selling prices from a historical low point at the beginning of 2013. Overall, industry analysts are estimating global PV installations in 2013 at approximately 36 GW, up from 32 GW in 2012,” the company said.

China, Japan and the U.S. represented the strongest growth markets towards the end of 2013 and while China remains the largest market for polysilicon, Taiwan, Singapore, South Korea and Japan are becoming increasingly important markets, it added.

Navigating the U.S.-China trade dispute

REC Silicon said the trade dispute between the U.S. and China could have a

significant negative impact on its financial results. The Chinese Ministry of Commerce slapped anti-dumping duties of 57% on the company's U.S.-made polysilicon last year.

However, the group said it had managed to mitigate the impact of tariffs in China by working with customers to use options currently available under existing laws, including the "Process in Trade" available under Chinese customs laws.

REC Silicon added that its "ability to continue to mitigate the impact of tariffs along these lines will depend upon the development of the ongoing U.S.-China

solar trade disputes."


Looking forward, the company is expecting market balance to improve in the first quarter of 2014, mainly due to shut downs of marginal producers, rationalization of older assets and stronger solar installation markets, particularly in Japan, the U.S. and and China.

Citing estimates by market analaysts, REC Silicon said global PV demand this year would reach between 40 and 56 GW, up from an estimated 36 GW in 2013.

"The large band reflects the persistent uncertainty regarding the supply and

demand balance for solar grade polysilicon in 2014 due to potential restarts

or new capacity additions occurring in 2014," it added.

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