REC reports another multi-billion loss but operating cash flow remains positive

Renewable Energy Corporation ASA (OSE: REC) reported of continued pressure on market prices stemming from industry oversupply situation. After deciding to exit the business, REC Wafer is now reported as a discontinuing operation, which should be taken into account in comparing quarterly numbers. Compared to previous quarter, average selling prices for polysilicon and modules were down eight percent. Behind higher volumes, revenues from continuing operations of just below 2 billion NOK were even with the previous quarter and down from re-presented 2.4 billion in Q2 2011.

Adjusted EBITDA was still positive at 230 million NOK, helped by further cost improvements, but reported EBIT from continuing operations fell to -3.7 billion, including a 3.6 billion impairment on Singapore fixed assets. Before charges EBIT is -122 million. Discontinuing wafer operations add a further 344 million NOK negative number net of tax. EPS for total operations was -4.07 NOK. Net cash from total operating activities was 0.6 billion NOK.

The revised refinancing proposal is subject to EGM approval on July 27th. Industry shakeup is still in full swing, with over 200 solar companies having discontinued operations since 2011 and those that manage to come through the period may come out of it with stronger earnings potential. REC thinks demand is now shifting to U.S. and Asia as subsidies schemes in Europe come to an end. The falling prices have also helped the customer project economics.