Bloomberg News

REC Solar Sales Beat Estimates on Aggressive Pricing

February 14, 2012

(Updates with comment from analyst in third paragraph.)

Feb. 8 (Bloomberg) -- Renewable Energy Corp. ASA, the Norwegian polysilicon maker, reported higher-than-estimated fourth-quarter sales as it cut polysilicon prices to clear inventory. The shares rose.

Sales were 2.87 billion kroner ($499 million), beating the 2.58 billion-krone estimate of 16 analysts surveyed by Bloomberg. The net loss was 2.48 billion kroner, or 2.49 kroner a share. The company posted a profit of 783 million kroner, or 0.7 kroner a share, a year earlier.

European solar-component makers are under pressure from Chinese rivals that expanded capacity just as consumption slowed, causing wafer and cell prices to plummet. REC and peers Solarworld AG and Q-Cells SE have cut production as demand shrinks in the region, where Germany, France and Italy have reduced subsidies to cap booming solar installations.

“Although the industry is struggling, REC has a very strong position within polysilicon and therefore it should survive what could be an industry shakeout,” Eirik Vegem Dahle, an analyst with Pareto Securities ASA, said by phone.

The company booked a charge of 2.5 billion kroner on its Singapore assets in the quarter. Earnings before interest, tax, depreciation and amortization dropped to 178 million kroner from 1.84 billion kroner a year earlier.

Shares Rise

“Overcapacity and inventory reductions led to steep market price declines throughout the fourth quarter,” the Sandvika- based company said today in a statement. “With a significant increase in polysilicon available for sale in the short-term spot market, REC has approached the market with aggressive pricing to secure volume off-take.”

REC rose as much as 11 percent, the most since Jan. 12, to 5.455 kroner, and was up 8.8 percent as of 3:34 p.m. in Oslo. The stock has risen 62 percent this year after falling 81 percent in 2011.

Average selling prices for polysilicon fell 42 percent, wafer prices were down 31 percent and module prices dropped 15 percent, REC said. Polysilicon prices will stabilize in the first quarter at about $30 per kilogram, Chief Executive Officer Ole Enger said in an interview.

“The Chinese have stopped production in all products and the balance is becoming better,” Enger said.

REC produced 5,206 metric tons of polysilicon in the quarter. Multicrystalline and monocrystalline wafer output was 173 megawatts, missing REC’s 200-megawatt forecast. It produced 168 megawatts of modules, less than the projected 175 megawatts.

REC had talks with its banks on possible changes in maturity, covenant levels and conditions on factory closures on its loan agreement. It may conclude a revised deal as early as the first quarter, Enger said.

“We are not in a desperate situation because we have plenty of liquidity and we are not in breach,” he said. “We are not in a hurry to do this.”

--Editors: Alex Devine, Randall Hackley

To contact the reporter on this story: Stephen Treloar at

To contact the editor responsible for this story: Christian Wienberg at

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