REC Falls as Pareto Sees Production Missing Targets: Oslo Mover

Renewable Energy Corp. (REC) fell to the lowest level in more than three weeks in Oslo after Pareto Securities ASA said plant maintenance may result in the solar component maker missing production guidance, curbing earnings.

The company, based at Sandvika near Oslo, dropped as much as 1.8 percent to 1.71 kroner, the lowest intraday level since Sept. 10, and traded at 1.724 kroner as of 1:45 p.m. in the Norwegian capital, for a fifth day of losses.

Third-quarter “volumes could disappoint relative to production guidance,” Eirik Vegem Dahle, an analyst at Pareto, said in an e-mailed note to clients today. Scheduled maintenance at REC’s silicon unit will increases costs and lead to a “sharp decline” in earnings from the previous quarter, he wrote.

European solar-component makers are under pressure from Chinese rivals that expanded capacity just as demand slowed, causing wafer and cell prices to plummet. Demand also shrank as France, Italy and Germany reduced subsidies to cap booming installations.

“The negative trend in prices for solar products seems likely to continue” because of overproduction and large inventories, said Dahle, who cut his recommendation on REC to hold from buy and reduced his price target to 1.8 kroner from 3.3 kroner.

“Although industry fundamentals indicate that prices should be close to a bottom, it is hard to have strong conviction given the uncertain demand outlook and market history of continued disappointments,” Dahle said.

REC, whose shares have fallen 97 percent since listing six years ago, is trying to improve its finances as excess capacity and weakening demand cut profit. In July the company raised 1.3 billion kroner in a share offer even after failing to persuade convertible bondholders to accept changes to their agreements.

To contact the reporter on this story: Stephen Treloar in Oslo at

To contact the editor responsible for this story: Christian Wienberg at

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