REC saw strong demand in third quarter: 2H 2011 demand uncertain

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Higher sales across its product range and continued ramp of its new manufacturing facility in Singapore helped REC reach third quarter revenue of NOK 3,783 million (US$642 million), up 37% compared to the previous quarter. Demand and pricing into the fourth quarter was expected to remain stable. Prices however, were expected to decline in 2011 but not by as much as the regression in the feed-in tariff in Germany of 13%. REC posted EBITDA of NOK 827 million in the third quarter, compared with NOK 449 million in the third quarter last year and NOK 455 million in the second quarter.  

REC Silicon reported revenues of NOK 1,421 million in the quarter, an increase of 52% from the third quarter last year and an increase of 23 percent from the second quarter. Measured in USD, revenues increased by 51 percent from the third quarter last year and by 24 percent compared with the previous quarter.

Revenues from FBR almost doubled from the previous quarter. Total Siemens and granular polysilicon production was 3,393 MT in the quarter, an increase of 19% from the previous quarter.

A power outage affected quality of yield, down to 66% from 77%.  However REC said it was back on track with yield since the problem. REC said that it had lost 250MT of polysilicon production due to the power outage. Production of solar and electronic grade polysilicon was 2,688 MT in the quarter, up 9% from 2,474 MT in the previous quarter.

The silane gas market has surprisingly declined from the second quarter, which was said to be due to both market demand dynamics and increased competition.

REC Wafer reported revenues of NOK 2,080 million in the third quarter, up 80 percent from the third quarter last year and up 21% from the previous quarter. REC noted that wafer market demand increased in the third quarter but average selling prices increased 3%.

Solar wafer production increased 20% with strong demand expected to continue. The ramp in Singapore is ongoing. However, the monocyrstalline production in Norway was only 26MW, much lower than anticipated. The company said that it has been impacted by recruitment issues at its plant in northern Norway. Capacity utilization of the plant was approximately 30% in the third quarter, REC said. REC also noted that the new wafer plant in Singapore is expected to reach full capacity by the first quarter 2011.

The company noted that REC Wafer had developed and almost completed installation of a low cost retrofit solution to its oldest generation of ingot furnaces.

REC Solar reported revenues of NOK 1,787 million in the third quarter, up 76% from the second quarter. REC noted that demand for modules continued to be strong with sales of 139MW, up from 32MW in the third quarter 2009 and 80MW in the second quarter of 2010. Module average selling price in euro’s were down 2% compared with the previous quarter.

REC said that module production amounted to 166MW, including 126MW from the new plant in Singapore. However, inventory increased in the quarter, due in part to an increased number of modules in transit end-user from the Singapore plant.

The cell efficiency in the operating lines was said to have continued to improve although at a lower rate than in the second quarter.

REC said that it expected continued strong demand for module deliveries into the  first quarter of 2011. Module prices are expected to decline less than announced FiT reduction in Germany of 13% but a price decline will also be affected by an expected overcapacity into 2011.

Demand uncertainty in particular for second half year of 2011 was seen, due to concerns over the potential for further subsidy cuts in various key markets.

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