Hanwha SolarOne posts stable Q2 financials; lowers FY shipment guidance

Korean-based Hanwha SolarOne, whose parent company recently won its bid to take the insolvent Q.Cells SE over, has posted comparatively positive Q2 financials, although its continues to suffer losses across the board.

Net loss for the period amounted to RMB266.7 million (US$42 million), slightly up from the RMB303.7 million lost in Q1 2012, but down on the loss of RMB69 million in Q2 2011. Meanwhile, Q2 2012 net loss per basic ADS was RMB3.16 ($0.50), compared to RMB-3.60 in Q1 2012 and RMB-0.82 in Q2 2011.

At RMB1 billion ($168.7 million), Q2 2012 net revenues rebounded from Q1 2012, which recorded revenues of RMB803.9 million in Q1. However, the figures were still 40.4% down on Q2 2011, which reaped revenues of RMB1.8 billion.

In a positive sign, operating loss for the quarter decreased to RMB82.8 million ($13 million), up from a loss of RMB220.9 million in Q1 2012, but down from a loss of RMB25.7 million in Q2 2011. This led to an operating margin of negative 7.7%, compared to negative 27.5% and negative 1.4% in Q1 2012 and Q2 2011, respectively.

In terms of gross profit, Hanwha SolarOne reaped RMB67.5 million ($10.6 million) in Q2 2012, significantly up on the loss of RMB75.2 million in Q1 2012, but slightly down on the profit of RMB162.9 million in Q2 2011. Again positive, Q2 2012 gross margin was 6.3%, compared to negative 9.4% in Q1 2012, "due to the decline in production costs outpacing the decline in ASP, and higher factory utilization which was driven by higher shipment volumes", and positive 9.1% in Q2 2011.

Looking at photovoltaic module shipments, including module processing services, the manufacturer reached the lower end of its guidance to ship 230.7 MW in the quarter. Sales were said to have been led by Germany, which accounted for 57% of total shipments. Overall, Europe and Africa were said to have accounted for 76% of shipments.

Q2 2012 average selling prices, excluding module processing services, were said to have further decreased, from RMB5.30 per watt in Q1 2012, and RMB10.09 in Q2 2011, to RMB4.85 per watt ($0.77).

Looking ahead, Hanwha forecasts similar shipments in Q3 to Q2, and a positive gross margin. For the FY, the company has slightly lowered its photovoltaic module shipments from 1 GW to between 900 MW and 1 GW. Meanwhile, it has confirmed that capital expenditures should be around $150 million, "depending on demand and other market conditions" and that processing costs, not counting silicon, should be approximately $0.50 per watt.

Commenting, Ki-Joon Hong, chairman and CEO said, "In spite of a difficult operating environment, we achieved some good progress during the second quarter. Our shipment volumes grew nicely quarter-to-quarter, our production costs continued to improve and now are in reach of our year-end target, and we are increasingly seeing synergies with our parent company, particularly in downstream activities.

"We remain optimistic that our presence in large new growth markets such as China, Japan and the US, will provide incremental volume potential in the second half of 2012. Challenging industry conditions remain: overcapacity, a spike in manufacturer’s inventories, declining prices, and regulatory issues pertaining to duties in the US and possibly Europe. In spite of these, we continue to move forward with our long-term goals, in concert with support from our largest shareholder, and believe we have established the brand, competitive cost structure, balance sheet and management team to enter the next growth stage of the industry."