REC Silicon reported decreasing revenue and loss in Q3 2019 yoy

Norwegian REC Silicon ASA reported third quarter 2019 revenues of $36.4 million compared to $43.7 million in Q3 2018. Regarding the first three quarters, revenue was $128.4 million (2018: $172.3 million). EBITDA for the third quarter was a loss of $5.6 million compared to EBITDA of $0.5 million in the second quarter of 2019 (Q3 2018: $-6.1 million). According to the company, the decrease in EBITDA was primarily due »a production interruption in connection with planned maintenance at the Butte facility, severance payments in connection with the Moses Lake shut down, and higher electricity costs for the semiconductor materials manufacturing facility in Butte, Montana.« Loss was $20.2 million, compared to $-19.6 million in Q3 2018. In the first three quarters of 2019 the company achieved loss of $81.5 million, compared to $333.5 million in the same period of the previous year.
Polysilicon sales volume for the quarter was 1,155 MT, a decrease of 44.8 percent compared to 2,090 MT in the prior quarter, while inventory decreased by 815 MT. Sales volume in Q3 2018 was 1,113 MT. Production volume (Siemens and granular) was equal to guidance of 340 MT in Q3 2019 compared to 980 MT in Q2 2019 and 1,615 MT in Q3 2018. In the first three quarters 2019 REC Silicon produced 2,828 MT, in the same period of 2018 the company stood at 7,616 MT. Silicon gas sales volumes for the third quarter were 860 MT compared to guidance of 900 MT. Silane gas prices decreased by 0.5 percent compared to the second quarter 2019.
REC Silicon has the capability to manufacture polysilicon for the solar energy markets from its manufacturing facility in Moses Lake, Washington. Impacts of the ongoing solar trade dispute between China and the United States, uncertain market conditions, and reduced demand for the company’s solar grade polysilicon resulted in the shutdown of the FBR polysilicon plant in Moses Lake, Washington in May 2019. The facility will remain shut down until significant positive developments in solar grade polysilicon markets occur.
Revenues for the Solar Materials segment were $6.6 million during the third quarter of 2019, a decrease of $5.6 million compared to second quarter 2019 revenues of $12.2 million. Sales volumes of granular solar grade polysilicon were 964 MT compared to 1,738 MT during the second quarter of 2019. Average prices realized by REC Silicon for prime solar grade granular polysilicon declined by 3.2 percent. Total average prices realized by REC for all granular grades declined by 8.7 percent due to higher sales volumes of lower grade polysilicon as remaining inventories are depleted. Granular polysilicon inventories declined by 961 MT during the quarter resulting in remaining inventories of 473 MT at September 30, 2019 which is expected to be sold during the fourth quarter of 2019.
REC Silicon targets polysilicon production of 250 MT during the fourth quarter of 2019 and 3,078 MT for the full year 2019. Semiconductor grade polysilicon production is targeted at 130 MT and reflects lower production due to the failure of certain equipment during the third quarter which forced a restart of all polysilicon reactors and a delay in finished production.
Silicon gas sales volumes are targeted at 860 MT for the fourth quarter of 2019 and 3,353 MT for the full year 2019. This estimate reflects the estimated impacts of current developments in trade relations and their impact on the overall economy and uncertainty in the PV sector due to market uncertainty.
On October 3, 2019 the Company announced a decision to consider the divestment of the Butte facility. Production from this facility primarily serves semiconductor markets with silicon gases and semiconductor polysilicon. If an acceptable bid is received, the proceeds will be used to retire the company’s debts, to provide a buffer for contingent liabilities (tax examination and indemnity loan), and to prepare to restart FBR production in Moses Lake, Washington when the trade dispute with China is resolved and REC Silicon regains access to polysilicon markets in China.

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