REC Silicon's Q1 net loss shrinks but EBIT margin falls deeper

Norway-based polysilicon and silicon gas supplier REC Silicon ASA (STO:RECO) today posted positive EBITDA and a narrower net loss in the first quarter of 2020 but saw a downward trend for revenues and EBIT margin.

REC Silicon closed the January-March quarter with a net loss of USD 10.5 million (EUR 9.7m), shrinking it from USD 23.4 million a year before, with earnings before interest, tax, depreciation and amortisation (EBITDA) totalling USD 1 million, as compared to a loss of USD 4.7 million in the year-ago period. The result also marked an improvement in sequential terms, mainly thanks to the lower total fixed cost spending and higher average polysilicon sales prices in the Semiconductor Materials segment.

Revenues, meanwhile, almost halved to USD 24.7 million as both revenues for the Solar Materials and Semiconductor Materials segments declined. The semiconductor business was largely hit by unfavourable pricing due to the seasonally lower sales of polysilicon and the overall uncertainty created by the COVID-19 crisis. EBIT margin reached a negative 43.9% from a negative 41.1%.

REC Silicon produces polysilicon and silicon gases in Moses Lake, Washington, and in Butte, Montana. In May 2019, however, it shut down the fluidised bed reactor (FBR) polysilicon plant in Moses Lake after the US-China solar trade war limited access to markets in China and demand for its solar grade polysilicon fell. Its total polysilicon production volume in the reporting period amounted to 242 tonnes.

The table below shows more details on REC Silicon’s financial performance in Q1.

REC Silicon noted that its Moses Lake, Washington, plant will remain closed until “significant positive developments in solar grade polysilicon markets occur.” To cope with the effects of the coronavirus crisis, the company is reviewing contingency plans to curtail operations and reduce costs so as to keep liquidity levels if demand for its products experiences a substantial drop. It pointed out that if this plan materialises, it has sufficient liquidity to meet its financial obligations but it will be able to do so for a finite period of time only.

As the thorough impact of the COVID-19 pandemic on the company’s operations cannot be estimated “reasonably,” REC Solar will not provide a second-quarter forecast for production volumes or silicon gas sales volumes, it said.

(USD 1.0 = EUR 0.925)

Choose your newsletter by Renewables Now. Join for free!