Hanwha SolarOne sees mixed Q1 results30. May 2012 | Industry & Suppliers, Markets & Trends | By: Becky Beetz
Having curtailed its photovoltaic module shipments to avoid potential retroactive tariffs from the U.S., Hanwha SolarOne has seen a decrease in activity in the first quarter (Q1) of 2012. Overall, its financials achieved mixed results. Despite this, it is confident about the future.
In the first three months of the year, Hanwha SolarOne suffered a gross loss of RMB 75.2 million (US$11.9 million), which, while significantly better than the RMB 604.6 million lost in Q4 2011, it was still down on the gross profit of RMB 380 million achieved in Q1 2011. As a result, Q1 2012 gross margin was negative 9.4 percent, compared with negative 61.8 percent in Q4 2011, and positive 17.2 percent in Q1 2011.
An operating loss of RMB 220.9 million ($35.1 million) was further recorded, up from RMB 1 billion in Q4 2011, but down on the operating profit of RMB 262.2 million in Q1 2011. Q1 2012 operating margin, meanwhile, was negative 27.5 percent, compared to negative 102.8 percent in Q4 2011 and positive 11.9 percent in Q1 2011.
Photovoltaic module shipments were negatively affected, having fallen from 189.1 megawatts (MW) in Q4 2011, and 248.5 MW in Q1 2011, to just 160.7 MW. The primary reason for the drop was the company’s decision to not ship to the U.S. As such, shipments to the country totaled just five percent compared to 33 percent in Q4 2011. Germany, India, China, Bulgaria and Slovenia have been identified as key markets.
As Ki-Joon Hong, chairman and CEO, commented, "Our first quarter results reflect our decision to reduce shipments to the U.S. in order to avoid any potential retroactive tariffs. This strategy now appears prudent as the U.S. Department of Commerce recently decided to retroactively enforce new countervailing duty and anti-dumping tariffs."
In terms of net revenues, Q1 2012 recorded RMB 803.9 million ($127.7 million), a decrease from RMB 978.3 million in Q4 2011, and RMB 2.2 billion in Q1 2011. The decrease was attributed to the lower shipments and a reduced average selling price (ASP), which was said to have fallen from RMB6.29 in Q4 2011, and RMB 11.23 Q1 2011, to RMB 5.30 per watt ($0.84).
Hanwha SolarOne expects to ship between 230 to 240 MW worth of modules in Q2 2012 and achieve a positive gross margin. For the full year, it adds that shipments should reach around one GW, capital expenditures around US$150 million and processing costs, excluding silicon, below US$0.50 per watt.
Ki-Joon Hong added, "The industry still faces some challenges, but we are encouraged by certain areas of progress for the company. We have increased utilization of our cell and module capacities, reflecting a significant improvement in demand … We are also making progress in our downstream initiatives.
"The $180 million loan facility we obtained in April 2012 provides us with the necessary capital to grow our business … We believe the next quarter will show the progress we have made as we start to see higher volumes, continued reductions in processing costs and a return to positive gross margins."
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