Renewable Energy Corporation (OSE: REC) has opened with wild swings after fears of a weak second quarter were realized. EBITDA was down to 871 million Norwegian Kroner from 1449 million and revenues were a little under 3.4 billion NOK, which was down 17% from Q1.
Current cost position is below target for FBR polysilicon and in line with the target in the new 1.3 billion Euro wafer, cells and modules factory in Singapore. REC continues to be able to make money in REC Silicon, its best bet for long-term competitive advantage, this time delivering 55 percent EBITDA margin. The solar market weakened significantly in Q2. Wafer prices were down 21 percent and module prices 14 percent compared to first quarter. The market for solar modules improved in June compared to April and May.
As was announced earlier, cell and wafer production in Norway will be temporarily shut down in the third quarter. REC is taking impairment charges of NOK 6.5 billion mainly in Norway. This pushed the bottom line sharply into negative and loss for the period was -6 681 million NOK. REC feels that current prices have improved competitiveness of solar towards other source and that end-users are now getting attractive value. REC foresees improving operations towards the end of the year.
The stock price has tanked in recent weeks, so pretty much all of these news were priced in. The trading range so far today is from 7.7 NOK to 9 NOK and currently REC is trading up 3% at 8.5 NOK. Full interim report is available here.
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