REC Announces 1Q 2012 Results

Renewable Energy Corporation ASA (REC) reported first quarter 2012 revenues of NOK 2,138 million and EBITDA of NOK 455 million. REC reduced net debt by NOK 0.5 billion in the first quarter to NOK 4.2 billion.

Attractive return on PV-investments for the end-users in key markets, expected feed-in tariff cuts in Germany as well as growing demand from a number of emerging markets led to high module installation volumes in the first quarter of 2012. Despite the high volumes, industry-wide overcapacity continued to put pressure on market prices throughout the quarter.

Compared to the previous quarter, REC’s average selling prices for polysilicon were down 15%, wafer prices were down 24% and module prices were down 18%.

With prospects of continued negative operating results, REC decided on April 24 to close down the 650 MW multicrystalline wafer plant at Herøya currently in operation. Production at the plant is expected to discontinue in the second quarter. This comes in addition to the decision on March 20 to close the monocrystalline wafer plant in Glomfjord. About 640 employees are affected. REC will explore alternatives for potential future use of the facilities.

REC’s first quarter revenues were down 25% from the previous quarter, while EBITDA was NOK 455 million in the first quarter, up from NOK 178 million in the previous quarter. In the first quarter, REC recognized income of NOK 795 million from terminations of polysilicon and wafer sales contracts partly offset by costs of NOK 366 million related to permanent shutdown of the mono wafer production capacity in Glomfjord, Norway.

EBITDA adjusted for these effects were NOK 27 million, compared to an adjusted EBITDA of NOK -178 million in the previous quarter. The improved adjusted EBITDA mainly reflects reduced inventory write downs and reductions in the overall cost base after close down of wafer production capacity in Norway.

EBIT was NOK 59 million in the first quarter, compared to negative NOK 2.7 billion in the previous quarter that included impairment charges of NOK 2.5 billion on fixed assets. Loss after tax was NOK 209 million in the first quarter, compared to loss of NOK 2,482 million in the previous quarter.