REC Announces 4Q, Full-Year 2012 Results

Renewable Energy Corporation ASA (REC) reported fourth quarter 2012 revenues from continuing operations of NOK 1,687 million and negative EBITDA of NOK 34 million. EBIT was negative NOK 2,178 after NOK 1.8 billion impairment on fixed assets related to the REC Silicon operations in the U.S. Net debt remained unchanged at NOK 1.8 billion from the previous quarter.

Solar demand improved somewhat in the fourth quarter 2012 compared to the weak third quarter. However, the slowdown observed in the largest solar markets in Europe were only partly offset by growth in other markets, like the U.S., China and Japan. Continued excessive global production capacity and inventory clearance led to significant downward pressure on selling prices, in particular for polysilicon. The low prices continue to put severe pressure on margins for all solar component suppliers and production capacities continue to be reduced.

REC’s fourth quarter revenues from continuing operations were up 12% from the previous quarter, while the negative NOK 34 million EBITDA was an improvement from negative NOK 184 million in the previous quarter. The main reasons for the improved EBITDA are increased sales volumes, cost reductions and NOK 80 million of net positive items in REC Silicon, partly offset by continued price declines. Compared to the previous quarter, REC’s average selling prices for polysilicon were down 14%, while solar panel prices were down 11%.

For the year 2012, revenues from continuing operations amounted to NOK 7,145 million, down 25% from 2011. EBITDA in 2012 amounted to NOK 360 million, down from NOK 2,043 million in 2011. The decrease is explained by sharp price declines for all products, only partly offset by cost reductions and increased sales volumes. Price declines also led to increased inventory writedowns.

“REC continued to focus on operational improvements and capital discipline in the fourth quarter. Cut backs on the supply side across the industry have led to price stabilization recently, but demand visibility is low. The solar market is diversifying geographically and I am convinced that the improved competitiveness of solar will continue to create attractive opportunities for REC going forward, ” said CEO Ole Enger.