Toronto-based Timminco (TSX: T.TIM, Stock Forum) announced after Tuesday’s market close that it is planning to temporarily curtail production of silicon metal as a result of difficult market conditions and reduced demand.
Timminco, a producer of solar grade silicon for the solar photovoltaic energy industry says it will implement the operating mode at the beginning of the second quarter, with a goal to preserve cash flow and decrease current working capital levels. During this period, the company says it will supply silicon metal to customers from its existing finished goods inventory.
The decrease in production will also result in a temporary workforce reduction.
Timminco will continue to produce solar grade silicon, although at levels that bring production in line with customer orders, and is planning to defer further capacity expansion of its solar grade silicon facility pending recovery of demand for solar grade silicon.
"The impact of global economic and credit conditions have prompted us to take decisive action to reduce costs and preserve capital until the silicon metal and solar grade silicon markets improve," said Heinz Schimmelbusch, chairman of the board and CEO of Timminco.
The company also released its fourth quarter and year-end results after market close, including a net loss for the fourth quarter of $1.3 million, or one cent per share, compared to a net loss of $8.8 million, or eight cents per share, for the fourth quarter of 2007. For the year, the company recorded a net loss of $22.6 million, or 22 cents per share, compared with a loss of $18 million, or 20 cents per share in 2007.
Consolidated sales for the fourth quarter of 2008 were $72.7 million, up 100% from $36.4 million for the fourth quarter of 2007. For the year, consolidated sales reached $252.6 million, an increase of 52% from $166.2 million for 2007.
On the company’s Bullboard Tuesday night, PLD1 said:
Todays news was not great, but not unexpected. This recession has not been good news for most companies or individuals, why would we expect TIM to be immune from this? The production and expansion curtailments are only because of the economy. Timminco's process does work and will make them very profitable when the economy turns and turn it will. The share price may very well go down tomorrow, but I believe in the future of the solar industry and the future of ths company, so I will be picking up some shares on the inevitable dip and stashing them in the back of my portfolio. With a little patience, I am sure I will be substancially rewarded. The sun will shine again, and it will shine on Solar panels made with TIM's UMG Silicone.[sic]
Shares of Timminco tumbled more than 25% to $1.74 Wednesday.
