REC Silicon, the Norwegian-headquartered producer of polysilicon, ended 2016 strongly, posting revenue for the fourth quarter (Q4) of $80.4 million, up from $50.9 million in the previous quarter.
This increase delivered EBITDA of $4.9 million, which is in stark contrast to the negative $-7.9 million posted in Q3 as the REC Silicon’s efforts to reduce its costs and maintain its liquidity proved fruitful.
In November last year the firm bemoaned the ongoing trade spat between China and the U.S., as well as the cuts to China’s FIT in June, as the leading reasons for its poor Q3 performance that led to 70 job losses in the U.S.
Having begun 2016 on the backfoot – the closure of the firm’s Washington Fluidized Bed Reactor (FBR) polysilicon production line in Washington in February last year was not the most encouraging of starts to the year – REC Silicon’s financial position looks more positive this time around.
Its efforts to remain cost conscious appear to be taking effect, with the company reporting a Q4 FBR cash cost of $11.2/kg, with similar costs expected in Q1 of this year. These lower costs helped increase polysilicon sales for the quarter to 3,801 metric tons (MT). At a financial level, the firm was also able to defer a $15 million capital contribution until July, which has also helped balance the books. Talks are also afoot to defer the remaining $154 million owed to its JV partner until after 2018.
Looking ahead, REC Silicon sees strengthened demand for polysilicon in the first half of 2017 on the basis that China’s July FIT cut will spur a manufacturing and installation rush both within and outside the country – a view shared by polysilicon analysts Bernreuter Research. And unlike 2016, REC Silicon added, low inventories across the polysilicon supply chain should help to suppress demand and pricing volatility in the second half of the year.
In Q1 2017, REC Silicon is targeting 3,080 MT of production, while annually it is eyeing 12,500 MT.
The company ended 2016 with a cash balance of $65.8 million.