Hanwha Q Cells increases Q2 profit by 20%

South Korean solar module producer Hanwha Q Cells has published today an encouragingly stable set of financial results of the second quarter (Q2) of the year.

The Q2 report reveals that Hanwha Q Cells enjoyed a 20.7% increase in gross profit quarter-over-quarter, with profit reaching $58.4 million in the three months to between April and June end.

Compared to Q1, total module shipments were up 12.2%, reaching 614 MW, of which 561 MW went to external projects, 28 MW to Hanwha’s own downstream ventures and 25 MW supplied to OEM activities.

Net revenues reached $338 million, a quarter-over-quarter increase of 1.3%, with Hanwha’s gross margin improving by 277 basis points to 17.3% over the same period – outperforming the company’s previous guidance.

At the end of Q2, Hanwha’s cash balance stood at $476 million – an increase of 145% – and its operating cash flow amounted to $424 million. Guidance for Q3 suggests between 800 and 820 MW of total modules will be shipped, and gross margin is projected to push past 18%.

FY2015 guidance remains stable, at some 3.2 to 3.4 GW of module shipments.

"The second quarter was the first full quarter to reflect the merger with Q Cells in February," said Hanwha Q Cells chairman and CEO Seong-woo Nam. "In particular, shipment volumes were higher and growing, gross margins are expanding, our product quality is much improved and our manufacturing scale and efficient production contributed to further reductions in our cost structure."

Nam added that Hanwha’s ability to ship modules duty-free to the U.S. via its Korean and Malaysian plants had served to increase the company’s competitiveness in the U.S. market – a market that now accounts for one-third of all shipments.

"We expect our U.S. presence to improve further as we will begin to ship modules to NextEra to fulfill the 1.5 GW contract," the CEO added, stressing that U.S. pricing is helping to improve Hanwha’s profitability.

Hanwha remains on track to reach a nameplant manufacturing capacity of 4.3 GW in cell and module production by the end of 2015, the company confirmed, and is targeting optimized module manufacturing costs of as low as $0.40 cents per Watt by the end of the year.

On the downstream front, Hanwha grid-connected 53 MW of solar projects in the U.K. during Q2, and is holding these projects on the company balance sheet as it seeks a sale of the assets. "We expect to sell 150 MW of operating assets in the U.K., Turkey and Chile during 2H15," said Nam.