REC cautions impending solar and silicon unit losses

Renewable Energy Corporation (REC) acknowledged that its third-quarter results, due on 24 October 2012, may again fall short of expectations, potentially diminishing the future of its Singapore plant.

The company, which finalised its plans for winding down its Norwegian wafer division via organised bankruptcy two months ago said that the “very challenging market conditions” drove down third-quarter sales volumes at both REC Solar and REC Silicon.

Meanwhile, average sales prices continue to push downward across the PV industry.

REC Solar refers to the Norwegian PV group’s vertically integrated Singapore factory, where it makes high-quality wafers, cells and modules.

Last quarter REC Solar reported earnings before interest, taxes, depreciation and amortization (EBITDA) of NKr2m ($351,000), with the company hoping that its wider fortunes would revive rapidly once its high-cost legacy Norwegian workforce was put out to pasture.

REC Solar sold a respectable 216MW of modules during the second quarter, and forecast full-year sales of around 750MW.

But the company expects the division to report a negative EBITDA of NKr175m for the third quarter, with module sales shrinking to just 170MW.

At the same time, US-based REC Silicon, seen by many observers as the jewel in the company’s crown, is expected to report a “close to break-even” EBITDA, down from a surplus of NKr242m in the second quarter.

Third-quarter polysilicon sales volumes are expected to come in at 4,800 metric tonnes (MT), compared to about 5,900MT last quarter, due in part to routine maintenance and equipment upgrades that left some capacity off line.

On 15 October it emerged that rival polysilicon producer Wacker Chemie will short-time 700 workers in Germany as it waits for a rebound in polysilicon prices and demand.

Overall, REC anticipates a negative EBITDA of NKr185m for the third quarter, with further financial hits expected as the company winds down its Norwegian operations.

Oslo-listed shares of REC fell hard in early trading on 16 October before stabilising around NKr1.20 – representing a more than 17% drop on the day prior, and a new all-time low.

Once touted as the way to a bright new future, industry observers say the future of REC’s flagship plant in Singapore is increasingly jeopardised by the company’s financial challenges and the ongoing glut of capacity across the global PV chain.

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