Timminco Ltd. says it sees growth opportunities returning in the silicon metals market after a turnaround in demand for its products helped cut its first quarter losses in half.
“With a recovery...well underway we are now beginning to look at opportunities to grow silicon metal operations,” chief executive Heinz Schimmelbusch said on a conference call with investors Tuesday.
The industries that use silicon — including producers of plastics, electronics, aluminum, semiconductors and solar panels — saw production drop sharply during the recession, but chemical and aluminum customers are starting to place orders again, Mr. Schimmelbusch said.
He added that he is optimistic that demand will remain strong and prices will rise.
“In the absence of new capacity, the growing demand for silicon metals will result in a significant shortfall in the rest of the world,” Mr. Schimmelbusch added.
The Toronto-based company reported Tuesday it lost $10.9-million, or seven cents per share, down from $22.3-million or 20 cents per share in the first quarter of 2009.
Timminco reported $30.8-million in sales compared with $37.7-million last year, when it added $14.1-million in sales from its magnesium operations, divested last July.
Sales of Timminco's silicon metal products increased 88 per cent to $30.8-million from $16.4-million, as it saw demand return for its products in the chemical and aluminum industries.
Mr. Schimmelbusch said the company's silicon metal plant is operating at full capacity and it is well positioned to benefit from rising demand and prices.
“The first quarter of 2010 provides a strengthened foundation from which we can rebuild our silicon metals focused company,” Mr. Schimmelbusch said.
“We are well positioned for growing demand for silicon metals driven by macro trends...and new applications for this versatile material are continually being developed,” he said, adding the company is seeking out new customer opportunities.
The company has made efficiency and cost-cutting improvements since the first quarter last of year, which helped cut losses.
However, the “significant improvement” in its results were somewhat offset by continued weakness for its solar grade silicon line.
The company has struggled as a lack of financing and fewer government subsidies put pressure on demand for solar power and solar-grade silicon.
Over the last year and a half, Timminco was forced to cut production, spin off assets, delay expansion and temporarily cut jobs due to reduced demand.
“Within our existing operations we have significant opportunities to reduce our cost structures improve efficiency and lower costs,” Mr. Schimmelbusch said.
As part of the company's efforts to stabilize its balance sheet, Timminco settled a debt in March with one of its customers by converting euro 9.2 million of euro 9.7 million of debt to a ten per cent equity stake in the company. It expects to repay the remainder to Q-Cells SE this year.
Timminco produces silicon metal for the chemical, aluminum and solar industries. It also produces solar grade silicon for the solar photovoltaic energy industry.
Timminco has written down $91-million in assets and investments over the past two years as it restructured its business, and booked a loss on the sale of its magnesium group in July.
Last week, the company said it will raise $13.6-million in a private placement, under which, AMG Advanced Metallurgical Group NV will acquire 15.4 million of the shares issued under the offering to increase its stake in the firm to 42.3 per cent.
Shares in the company, which reported its results after markets closed, lost three cents to 64 cents each Tuesday on the Toronto Stock Exchange.
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