October 30, 2009

Oslo, Norway: REC Group Reports Third Quarter Results

Renewable Energy Corporation ASA (REC) reported revenue of NOK 2,160 million in the third quarter 2009, an increase of 13 percent from NOK 1,919 million in the third quarter 2008.

Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to NOK 429 million in the third quarter 2009, a decline of 40 percent from NOK 711 million in the third quarter 2008.

The EBITDA margin of 20 percent in the third quarter 2009 compares with 37 percent in the same quarter last year. The significant decline in EBITDA mainly relates to; (i) weaker market demand and reduced capacity utilization in REC Solar and REC Wafer, (ii) expansion cost and negative contribution from the ramp-up of new plants of NOK ~168 million, (iii) loss on sales and write-down of cell and module inventories of NOK ~100 million, and (iv) a further increase of the provision in REC Solar of approximately NOK 21 million for repairs of malfunctioning junction boxes.

When adjusting for expansion/ramp-up cost, inventory write-downs and junction box (total of NOK ~289 million), the underlying EBITDA margin was 33 percent. The operating profit (EBIT) was NOK -665 million in the third quarter, compared to NOK 537 million in the same quarter in 2008, and the EBIT margin decreased to -31 percent from 28 percent.

Excluding the impairment charge relating to Sovello, EBIT for the third quarter amounted to NOK 7 million. REC reported net financial items of NOK -478 million in the third quarter, including net loss on derivatives of NOK 51 million.

In the same quarter last year, net financial items were NOK 1,224 million, including net gains on derivatives of NOK 932 million. Including these effects, loss before tax was NOK 1,143 million in the third quarter 2009, compared to a profit before tax of NOK 1,761 million in the third quarter 2008.

Earnings per share for the quarter was negative NOK 1.52, compared to positive NOK 2.20 in the third quarter 2008 and negative NOK 1.20 in the second quarter 2009. The earnings per share are calculated on the base of the average number of shares of 664.8 million in the third quarter 2009.

Further details about: REC