REC Solar to sell full module production capacity in 2014

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Singapore-based PV module manufacturer REC Solar expects to sell its full module manufacturing capacity output in 2014, further indicating a turnaround in fortunes after restructuring. 

REC Solar reported third quarter 2014 revenue of US$149.1 million, down 9.3% from the previous quarter, which the company said was due to the seasonal slowdown in Europe and softness in the Japanese market.

However, PV module production in the quarter was up 7.1% (248MW) from the prior quarter as well as the company expecting production in the fourth quarter to reach 255MW, resulting in around 950MW of production (full capacity) achieved in 2014. 

Management noted in its earnings call that it expected all modules produced to be sold as strong demand, notably in the US and UK remained sell-through drivers.

The company had only been operating with around one months worth of module inventory all year. 

The company noted that orders received from the US had topped 685MW and sold 34MW in the US in the third quarter. Module sales to UK were up 40% from the prior year period. 

Arndt Lutz, senior vice president of REC Group and managing director of its North American business told PV Tech during Solar Power International (SPI) held last week in Las Vegas that the company expects the “US market to remain strong for years.” REC Solar is not impacted by any anti-dumping duties in the US or EU. 

Lutz also noted that with the introduction of its 72-cell modules to the US market, it opened-up further utility-scale business with both major EPC’s and US utilities such as the 300MW deal announced with Recurrent Energy for utility-scale developments in California.

The company also reported that module EBITDA for the quarter stood at US$15.1 million, or 10.1% of revenue and in line with company expectations.

Production update

REC Solar noted that its first phase of ingot furnace upgrades is expected to be completed by the end of the year, providing 880MW of in-house wafer production. 

The company noted that the second phase furnace upgrade programme was on track to be completed in the second quarter of 2015, resulting in in-house wafer capacity reaching 950MW, which would significantly lower the need to purchase outside ingots and help reduce costs. 

Solar capacity would remain at 770MW for 2014, while module assembly debottlenecking completed in the third quarter would expand capacity slightly to around 1GW. 

Two new module lines were on track to be operational by the end of the second quarter of 2015, providing an increase in capacity to 1.3GW as planned. 

Management noted in the earnings call that it did not plan to use OEM outsourcing to boost module capacity in 2015. 

Production cost reduction programmes would also continue in 2015, including increased furnace and module output, solar cell efficiency gains and overall operations savings. Module cash costs are expected to reach US$0.60/W by the end of 2014. 

REC Solar expects capital expenditure to be around US$22 million in the fourth quarter with US$10 million allocated to the new module assembly lines. 

Martin Cooper, CEO of REC Solar ASA said, “Our furnace upgrade and module expansion is progressing according to plan and we retain strong focus on reducing our solar panel cash costs/Wp. We are confident that we will be able to continue to reduce costs and develop our product offering over the coming years and retain our competitiveness.”

According to management, REC Solar is expected to focus on US, Japan and European markets, notably the UK again in 2015.

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