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UPDATE 2-REC sees recovering solar manufacturing industry
February 2, 2011 / 8:25 AM / 7 years ago

UPDATE 2-REC sees recovering solar manufacturing industry

* EBITDA 1.8 bln crowns vs 1.13 bln forecast

* Cites positive developments in cyclical solar market

* Shares jump as much 13 pct on rising Oslo market

By Wojciech Moskwa and Mikael Holter

OSLO, Feb 2 (Reuters) - Norwegian solar energy parts maker Renewable Energy Corp (REC.OL) beat quarterly profit forecasts on Wednesday and voiced confidence in the troubled market for its products.

The maker of parts for power production throughout the solar value chain saw its shares jump as much as 13 percent as investors weighed the news in the context of overproduction and curbs in state subsidy schemes. [ID:nLDE70U0TS]

REC said earnings before interest, tax, depreciation and amortisation (EBITDA) were around 1.8 billion crowns ($310.1 million) in October-December, against a ThomsonReuters Starmine average estimate of 1.13 billion.

REC cited a “stronger than expected market, enabling sales of accumulated... products at attractive prices” as well as higher than expected production of high grade silicon as the reasons behind the above forecast results.

Einar Kilde Evensen, an analyst at DnB NOR Markets said the announcement confirms gains in REC’s silicon producing unit and even though prices of the metal used in solar wafers has slipped from highs in early 2011, it was still “good news”.

Evensen has a buy rating on REC and a price target of 26 crowns, which may now be upped.

Arctic Securities analyst Markus Bjerke said the positive profit statement ahead of full results on Feb. 9, built market confidence in REC’s ability to ramp-up production from its new Singapore plant.

“This may well be a milestone for REC as it will help the market gain a lot more confidence in its operations at higher volumes and in their plans to cut costs,” Bjerke said.

REC has been hit by troubles at its silicon production plant in Moses Lake, Washington, and by fears of a share overhang as its main owner, Norwegian conglomerate Orkla (ORK.OL) has mulled exiting its 40 percent stake, hitting its valuation.

But Orkla said last month that its REC shares were not for sale for now, helping warm chilly investment sentiment after the stock lost nore than 90 percent of its value since 2007.

Shares in REC surged 13 percent in early trade to a three month high. At 0905 GMT, the stock was up 10.5 percent at 21.45 crowns on a rising Oslo market .OSEBX.

[ID:nLDE70B0J3] ($1=5.804 Norwegian Crown) (Editing by Erica Billingham and Andrew Callus)

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