Thursday, January 17, 2013

REC leaks detailed information on strategy and cost

Mikkel Tørud, SVP Investor Relations & Business Development, was holding a presentation at the Pareto Power & Renewable Conference in Oslo today. The document, published on REC's website holds very interesting and detailed information on what their strategy has been for the past four quarters and provides background information on the lay-offs in Moses lake.

REC is basing their strategy on the market analysis from Bloomberg New Energy Finance, expecting global installations to go up from 30-34GWp in 2012 to 40-50GWp in 2015, which would be the matching point for global production capacity.

The geographical distribution of those sales is expected to shift heavily from Germany, Italy and rest of Europe to China, the U.S., Japan and upcoming new markets.

According to REC all polysilicon producers worldwide are now operating with reduced utilization and the only growth expectations are in the low cost market segments.

As prices in the module markets aren't expected to recover, the cell/module technology mix will continue to be dominated by polysilicon (around 60% market share , with mono around a third of the market and thin film around 11% market share.

Tørud's presentation doesn't skip the dominance that China has achieved in the cell and module production market. He adds REC's strategic positioning in a level of detail that is unprecedented.

Outlining the reasons for shutting down the inefficient Siemens process in Silicon I in Moses lake, comparing its technological and commercial disadvantages over the FBR process and showing the detailed cost breakdown that allows REC to stay in the market against the aggressive Chinese competitors.

It remains to be seen if the brand value and market position defined by quality and distribution channels will be sufficient to keep REC in the game. The liabilities that the group created in the insolvency of their national wafering operations in Norway could still jeopardize RECs survival in the quarters to come.

Highly interesting read though, here's the link to the file posted by REC:

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