Bloomberg News

REC Will Cut Solar Manufacturing Capacity as Demand Slumps

November 29, 2011

(Updates with company comment in second paragraph.)

Nov. 29 (Bloomberg) -- Renewable Energy Corp., a Norwegian maker of solar components, will start shutting manufacturing capacity because of slumping demand. The shares fell.

“The debt crisis in Europe and the turmoil in the capital markets continue to have severe negative impact on demand in the solar market,” the company said today in a statement, adding that lower prices and reduced output would affect fourth-quarter results.

Market prices for modules, wafers and polysilicon have dropped about 10 percent, 30 percent and 35 percent respectively since Oct. 1, REC said. Inventories are increasing for all its products and unless solar demand improves, REC will make further adjustments to production levels.

REC dropped as much as 10 percent to 3.60 kroner in Oslo and traded at 3.61 at 9:51 a.m. local time.

The company said it will reduce output of multi-crystalline wafers at its Heroeya plant in Norway starting on Dec. 1. REC plans to temporary halt 60 percent of capacity through the first quarter of next year, affecting about 200 employees.

“In this very challenging market environment the solar industry is set for a phase of shake-out and consolidation over the next 1-2 years,” Chief Executive Officer Ole Enger said. “REC needs to adapt production to the prevailing market conditions.”

--Editors: Will Kennedy, Randall Hackley

To contact the reporter on this story: Meera Bhatia in Oslo at mbhatia2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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