Hanwha reaps benefit of Q Cells takeover with Q3 net profit, capacity expansions


Hanwha Q Cells has recorded a positive Q3, with results up across the board. Jubilantly, Seong-woo Nam, chairman and CEO, says the merger of Hanwha with Q Cells in 2012 is paying off. He adds that in addition to a return to net profitability, the Korean solar company has seen shipments boosted, processing cost reductions have fallen below US$0.40/W, and a one-time $51.2 million arbitration award relating to inventory valuation during the Q Cells acquisition has been paid.

"This quarter was one of the most significant milestones for the company," he stated. Looking ahead, module shipments are expected to increase by more than 50% in the final quarter of 2015, to 1.2 to 1.4 GW, up from the 804 MW shipped in Q3.

"We expect to have a more meaningful contribution in the fourth quarter from sales of downstream projects up to 150 MW, bolstering both revenues and profits. And, we have begun shipments to NextEra Energy Resources as we begin to fulfill that 1.5 GW contract in the higher-priced US market," said Nam.

Q3 net revenues grew 26.4% Q/Q, from $338 million, to hit $427.2 million. Gross profit and gross margin also recorded increases, from $58.4 million and 17.3%, respectively, to $93 million and 21.8%. In Q4, Hanwha Q Cells expects to see a gross margin of over 20%.

Overall, a net income of $52.4 million was recorded, up significantly on the loss of $14.2 million in Q2. For the full year, it has raised its gross margin guidance to around 19%. Module shipments are expected to be between 3.2 and 3.4 GW.

Capacity expansions

Hanwha Q Cells is on an "aggressive" capacity expansion path. As of September 30, it had in-house production capacities of 1.35 GW for ingots, 900 MW for wafers, 3.55 GW for cells and 3.35 GW for modules. Cell and module capacities are expected to be expanded to 4.3 GW and 4.3 GW, respectively, by the end of 2015, and to 5.2 GW and 5.2 GW, respectively by mid-2016.

"600 MW for cell in 2015 and additional 900 MW for cell in 2016 of the aforementioned new cell capacity is from the production facility operated by Hanwha Q Cells Korea, an affiliate of Hanwha Q Cells Co., Ltd," said the company in a statement released. A capital expenditure of $280 million has been earmarked for both the capacity expansions, and for manufacturing technology upgrades.

"Our aggressive capacity expansion plans in order to meet anticipated demand in 2016 and beyond are progressing on schedule. We expect to close this year with an estimated 4.3 GW of both cell and module capacity and 5.2 GW of both cell and module capacity by mid 2016, with approximately half located in Korea and Malaysia where we can ship modules duty free into the US," continued Nam.

Regarding its downstream activities, Hanwha Q Cells has a pipeline totaling around 1.2 GW, 40% of which is said to be in late stage development.

"Our outlook for 2016 is also robust," concluded Nam. "We will enter the year with the strongest foundation in the Company’s history with a competitive position rivaling, or in some cases exceeding, those of other Tier-1 solar companies in a number of categories including manufacturing scale, processing costs, technology and profitability. Our near-term downstream focus on build-to-sell will add to both revenues and profitability and enable the Company to more prudently manage its liquidity and financial leverage."