Monday, August 27, 2012

UPDATE 1-Norway's REC Sees Continued Solar Price Falls

Struggling solar equipment maker Renewable Energy Corp. expects global overcapacity to keep prices under pressure even as firms close production, and said on Thursday a reduction in subsidies in key markets was keeping the outlook uncertain.

"Current market price levels are putting pressure on high cost capacity and capacities are being reduced across the solar value chain," said Norway-based REC, which has closed some production and continues to restructure to survive a global silicon glut.

"Despite these adjustments the prices have continued to decline across the value chain in the first half year and this is expected to continue throughout 2012," it added.

Germany recently cut its feed-in-tariff for solar power and Italy was also expected to cut it support scheme, putting downward pressure on demand, REC added.

However, the price falls have improved the competitiveness of solar power and global sales volumes are expected to rise to 30 gigawatts in 2012 from 27 GW in 2011, REC added.

To save the company, REC closed some operations this year, taking a 3.6 billion crown ($590 million) impairment charge, dragging its bottom line on continuing operations to a 3.71 billion crown loss in the sector quarter.

On the operating level, it beat expectations, reporting earnings before interest, tax, depreciation and amortisation (EBITDA) of 230 million crowns ($37.7 million) excluding one-off items, above expectations for 150 million crowns.

The company recently raised $218 million in equity and restructured its debt.


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