The second quarter of 2009 continued to be a challenging time for Renewable Energy Corp. (REC), which noted a catalogue of difficult business conditions when reporting financial results for the quarter. The integrated PV supplier noted a continued deterioration in market conditions that included lower-than-expected demand, resulting in increasing levels of product inventory and significant pressure on module prices due to overcapacity that could see module process decline by 35% in 2009.
REC noted that it had curtailed production of wafers and modules in July, with utilization rates at approximately 50% in Q209. However, the company said that it was unable to reduce module inventory levels. REC expects to return to full module production in late August and wafer production will increase gradually due to customer supply commitments.
Polysilicon production was down slightly from the previous quarter, but up 12% compared to the same quarter of 2008. The company said that average prices had remained flat with 2008.
Its new wafer, cell and module manufacturing plants in Singapore are 75% completed, and production is targeted to start in the second half of 2010. REC expects the lower manufacturing costs to improve its competitive position with other Asian-based manufacturers. REC is on target for 9000MT of polysilicon production this year.
Higher inventory, lower production levels and expenses allocated to a module warranty issue resulted in significantly lower earnings. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to NOK 218 million (US$35.7 million) in the second quarter 2009. Revenue was NOK 2,308 million in the second quarter, an increase of 9% compared to the same quarter last year and up from NOK 2,013 million in Q109.