Solar companies around the world are struggling as industry consolidation begins.
Norway’s Renewable Energy Corp. (STO: RECO) is no exception. The company recently stated that it may be considered for a merger in the near future.
“We won’t be surprised if there are more mergers in the time ahead” and REC is involved in discussions with possible partners, Chief Executive Officer Ole Enger said in an interview in Oslo today after presenting REC’s third-quarter results. “When results are like now, you must always be open for solutions that can give better results.”
Renewable Energy is based in Sandvika, and the company results showed a net income of 408 million kroner ($71 million) in the time since its Norwegian wafer unit went bankrupt. Continuing operations led to a loss to the tune of some 452 million kroner ($79 million).
REC, like other troubled European solar companies, is suffering from the impact of ultra-low priced Chinese-made solar panels flooding the world market. The company issued an alert last week saying its results would not match analyst estimates.
Just about all operators in the sector are losing a lot of money. Last week, Boston’s GTM Research issued a report that estimated up to 180 solar manufacturers will either fail or be bought out by 2015.
54 of these are “solar zombies” in China that operate with government support, and these will likely close or be bought out.
Siemens (NYSE: SI) is another example. The company recently said that it would be exiting the solar sector completely. The company cited the current hostile market conditions, excessive price pressure, and its internal expectations. It will still provide steam turbines, control systems, and generators for those customers that are still operating solar plants.
As for Renewable Energy, its shares dropped to 1.16 kroner on Tuesday—a historic low. However, things improved by as much as 4.9 percent after the company released its report. Shares later rose to around 1.175 kroner.