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REC Annual Report 2011
15
Sales volumes of solar grade polysilicon to third party customers
increased in the second half of 2011, after RECWafer reduced
wafer production in Norway. About 50 percent of the electronic
and solar grade polysilicon sales volume in 2011 was sold to
RECWafer and REC Solar, compared with 72 percent in 2010.
Average selling price in USD for Siemens and granular polysilicon
declined, in particular in the second half of 2011. With a significant
increase in polysilicon available for sale in the short term spot market,
REC approached the market with aggressive pricing to secure volume
off-take. The internal transfer price of polysilicon shipped to RECWafer
and REC Solar was adjusted down to the prevailing market price
during the fourth quarter.
In 2011 the operational focus for REC Silicon has been to stabilize
production and improve product quality from the new Silicon III and
Silicon IV silane gas and FBR reactors.
Longer production runs, higher throughput and improved process control
resulted in significantly improved product quality from the FBR reactors
during the year. 84 percent of the granular polysilicon volume produced
in the FBR reactors met the solar grade quality specifications in 2011
compared to 75 percent in 2010.
Furthermore, REC Silicon continues to receive positive customer
response to the granular polysilicon material and the work to secure
new contracts for the solar grade material continues. The granular form
factor of the product is allowing for enhanced productivity and cost
reductions in the customers ingot and wafer production process.
Silane gas sales amounted to1,651MTin2011, down13percent
from2010. Silane gas saleswere negatively affectedbyweakeningmarket
conditions during2011. The softness in the silane gasmarket continues as
themajor endmarkets includingdisplays, semiconductors andPVall
experience significantweakness due to themacroeconomic environment.
REC Silicon’s EBITDA amounted to NOK 2,781million for the full
year 2011, broadly in line with 2010. EBITDAmargin thus ended at
50 percent down from52 percent in 2010.
RECWafer
RECWafer producesmono- andmulticrystallinewafers for the solar cells
industry inGlomfjord and at Herøya inNorway. RECWafer operates
950MWof production capacity, andemploys approximately900people.
REC’swafer operation inSingapore is reported as part of RECSolar.
For 2011, revenues in RECWafer amounted to NOK 4,413million, a
decrease of 35 percent from2010. The decrease reflects lower sales
volumes and significantly lower average selling prices.
(FINANCIAL FIGURES – NOK INMILLION)
2011
2010
Revenues
4 413
6 804
EBITDA
21
808
EBITDA - margin
0%
12%
EBITDA excluding special items*
-396
505
EBITDA - margin excluding special items
-9%
7%
Depreciation and amortization
-417
-781
EBIT before impairment charges
-395
28
Impairment charges
-5 807
-11
EBIT
-6 203
16
EBIT - margin
-141%
0%
Multi wafer production in**
921
1 121
Mono wafer production in MW***
153
89
Total wafer production in MW
1 074
1 210
Multi wafer sale in MW**
900
1 124
Mono wafer sale in MW***
150
99
Total wafer sale in MW
1 050
1 223
*
Special items include costs for onerous contracts andwrite-down of inventories due
to capacity shutdowns, restructuring costs andwafer contract cancellation fees
** Multi production and sale reported at 16.5 percent cell efficiency for 2011, and 15.5
percent for 2010
*** Mono production and sale reported at 20 percent cell efficiency for all periods.
Total wafer production amounted to 1,074MW in 2011, a decrease
of 11 percent from2010. Approximately 85 percent of the production
was multicrystalline wafers and the remaining mono wafers. Total sales
volumes were broadly in line with production. Due to the weak market
conditions the wafer capacity at the oldest plants at Herøya and at the
multicrystalline wafer plant in Glomfjord was permanently shut down
in 2011.
EBITDA amounted to NOK 21million for the full year 2011, down
fromNOK 808million in 2010. The EBITDA decline primarily reflects
reduced sales volumes reduced selling prices, costs for temporary
and permanent close down of production capacity and inventory write
downs partly offset by reduced production costs and wafer sales
contract termination fees.
Significant improvements with respect to both cost and quality have
been made both at Herøya and in Glomfjord plants in 2011.
Despite these improvements, due to further weakening of the wafer
market, on November 29, 2011 and on January 4, 2012, REC announced
further reduction of capacity utilization at the remaining 650MW
multicrystalline wafer plant at Herøya and at the 300MW
monocrystalline wafer plant in Glomfjord.
With prospects of continued negative operating results, REC decided
on March 20, 2012 to permanently close down the 300MW
monocrystalline wafer plant in Glomfjord. About 200 employees are
affected.
Report from the Board of Directors