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REC's third quarter results indicate a result below analyst estimates. The Norwegian company cites challenging market conditions leading to the sequential reduction in both sales volumes and selling prices for REC Solar and REC Silicon.
Based on preliminary consolidation, REC expects to report, from continuing operations, revenues of NOK 1.5 billion (US$2.64 million) and a negative EBITDA of about NOK 185 million (US$32.6 million) for the third quarter 2012. REC Silicon is expected to report close to break-even EBITDA while REC Solar expects to report a negative EBITDA of about NOK 175 million (US$30 million).
Third quarter polysilicon sales amounted to about 4,800MT, silane gas sales to about 360MT and modules sales to 170MW. Average selling prices were down 10% for polysilicon, 4% for silane gas and 10% for modules compared to the previous quarter. These effects, as well as inventory write downs negatively affected the results.
As announced in the second quarter report, REC took a planned annual outage of the silane gas and FBR plants in the third quarter, to perform maintenance and complete initiatives to improve power reliability and further enhance FBR quality yields. As a result of this outage, the third quarter polysilicon production volume was reduced and consequently the unit cost per kg increased compared to the previous quarter.
REC net debt was reduced by NOK 2.2 billion to NOK 1.9 billion at the end of the third quarter. Net debt including the convertible bond at par value amounted to NOK 2.4 billion. The debt reduction mainly reflects issuance of gross NOK 1.7 billion of new equity and the positive effect of the insolvency of REC Wafer Norway AS. REC Group has preliminary estimated a net gain of NOK 0.8 billion as part of discontinued operations in the statement of income due to the insolvency, of which NOK 0.4 billion in net debt reduction.
