Renewable Energy Corp. (REC), the Norwegian solar maker grappling with excess capacity and falling demand, slumped to a record in Oslo after saying third-quarter results will miss analyst estimates.
Shares in the Sandvika-based company, which has posted a net loss for each of the previous six quarters, fell as much as 18 percent to 1.190 kroner, the lowest since the stock was first sold in 2006. It was the biggest loser on the Oslo Stock Exchange’s All-Share Index. More than 21 million shares were traded so far today, compared with an average daily total of 11.6 million in the past six months.
REC said it expects to report revenue from continuing operations of 1.5 billion kroner ($263.5 million) and a loss before interest, tax, depreciation and amortization of about 185 million kroner. The company had been expected to report Ebitda of 97.7 million kroner on sales of 1.64 billion kroner, according to the average of 10 analyst estimates compiled by Bloomberg.
REC, like European peers Solarworld AG (SWV) and Q-Cells SE, is under pressure from Chinese competitors that expanded just as demand slowed, causing solar-wafer and cell prices to plummet. Cuts in renewable-energy subsidies in France, Italy and Germany have also reduced sales for the Norwegian manufacturer.
“Very challenging market conditions led to a quarterly sequential reduction in both sales volumes and selling prices” at REC’s solar and silicon units, the company said today in a statement.
The guidance is “even worse than feared” and “could fuel speculation” about a possible closure of REC’s operations in Singapore, Eirik Vegem Dahle, an analyst at Pareto Securities ASA, said in an e-mail. “In addition, debt maturities in 2014 are starting to look difficult on current earnings levels.”
REC, which had net debt of 1.9 billion kroner at the end of the third quarter, has sought to bolster its finances by curbing costs and reducing capacity to adapt to falling demand. In July, it raised 1.3 billion kroner through a share offer even as convertible bondholders rejected proposed changes to the terms of their agreements.
“On the positive side, net debt is slightly lower than expected,” Pareto said. “Before markets show some signs of improving, we would not be an owner of REC.”
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