REC Silicon plans long-term shutdown of FBR plant, posts wider Q1 loss

The Moses Lake polysilicon factory. Source: REC Silicon. License: All Rights Reserved.

May 9 (Renewables Now) - REC Silicon ASA (OSE:REC) today posted a wider EBITDA loss for the first quarter and said it plans a long-term shutdown of its Moses Lake polysilicon plant in Washington from June 30, 2019.

As from May 15, the Norway-based polysilicon and silicon gas supplier will begin curtailing the operation of the Fluidised Bed Reactor (FBR) facility. The goal is to reduce spending and maintain liquidity. The particular plant operated at just a quarter of its capacity throughout the first quarter and REC Silicon has concluded that with the current market conditions, that level of utilisation will not be sufficient to maintain the company’s liquidity and its ability to meet operating cash flow requirements.

REC Silicon’s current liquidity position, results of operations, and the proceeds from a recent private placement are seen as enough to cover operating cash flow requirements for the rest of its activities and meet debt service obligations over the next 12 months.

The timing and length of the above-mentioned shutdown is dependent on REC Silicon’s ability to regain access to the Chinese market for polysilicon as a result of the trade negotiations between the US and the Asian nation.

As per the company’s Q1 financial results, REC Silicon booked a loss before interest, tax, depreciation and amortisation (EBITDA) of USD 4.7 million (EUR 4.2m) compared with a loss of USD 3.8 million in the fourth quarter of last year and earnings of USD 14.6 million in January-March 2018. It blamed the deteriorating result on the challenging market conditions for solar grade polysilicon and the company’s limited access to the Chinese market.

"First quarter results are far below our potential due to restricted access to Chinese markets. We are hopeful that REC Silicon's access to polysilicon markets in China will be restored and we can return to 100% capacity utilization in our FBR facility," said president and CEO Tore Torvund.

The table below gives more details.

Figures in USD million, except percentages Q1 2019 Q1 2018 Q4 2018
Revenues 45.0 69.6 48.9
EBITDA (loss) (4.7) 14.6 (3.8)
EBITDA margin (10.4%) 21.0% (7.7%)
EBIT (loss) (18.5) (5.7) (14.4)
EBIT margin (41.1%) (8.1%) (29.5%)
Net profit (loss) (23.4) 60.5 (8.0)
Polysilicon production in MT (Siemens and granular) 1,508 3,523 1,664
Polysilicon sales in MT (Siemens and granular) 2,004 2,904 1,690

(USD 1.0 = EUR 0.893)

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