Hanwha Q Cells Q1 results show encouraging Y/Y resurgence in profit, revenue and shipments


Korean solar module manufacturer Hanwha Q Cells has recorded a 54.4% year-over-year first quarter revenue increase when compared to Q1 2015.

Although the Q1 revenue of $514.9 million was down 26.7% on Q4 2015’s $702.1 million revenue, it far surpassed the $333.5 million posted a year ago, boosted by total module shipments of 912 MW – a figure that exceeded the guidance range of 850 MW to 900 MW.

Module sales generated the bulk of Hanwha’s net revenues (accounting for $506.1 million), with just 13 MW of downstream projects – generating $13.3 million – recognized in the firm’s activities and components sales.

This Y/Y upturn in performance was also evident in Hanwha Q Cells’ gross profit, which reached $109 million in Q1 2015, up sharply from the $48.4 million registered a year prior. The resulting gross margin of 21.2% was an improvement both sequentially (Q4 2015: 19.1%) and annually (Q1 2015: 14.5%), largely driven by continued reduction of module manufacturing costs and increased production scale, Hanwha said.

The company also managed to reduce its operating expense 35% sequentially, falling from $80.4 million in Q4 2015 to $52.3 million in Q1 2016. Total operating expenses as a percentage of revenue duly fell, too, to 10.2% in Q1 2016, compared to 11.5% in Q4 last year and 19.7% in Q1 last year. R&D, administrative and marketing expenses were all below those figures recorded last year.

For shareholders, net income was $27.5 million for the quarter, compared to $26 million in Q4 2015 and $20.4 million in Q1 2015. Hanwha Q Cells ended the quarter with cash and cash equivalents of $327.3 million – a sizable gain on the $200 million with which it ended the last quarter.

Hanwha also published more information on its decision to divest from ownership of a module fab in Eumseong, Korea, with final conclusion of the deal – worth $57 million to Hanwha – expected before the end of the second quarter.

This leaves Hanwha Q Cells with 1.4 GW annual ingot production capacity, 900 MW wafer capacity, 4,850 MW cell and 4,800 MW module capacity, although the company plans to expand both cell and module production capacity to 5,200 MW each. This is expected to be completed by the mid-way point of the year.

Looking ahead, Hanwha Q Cells expects Q2 shipments in the range of 1.1 GW to 1.15 GW, generating a gross margin of 19-20%. For the full year 2016, increased guidance suggests shipments of 4.8 GW to 5 GW of modules.

"With a successful turnaround year behind us, we started 2016 with the right strategic elements in place to meet growing demands for our products and to further strengthen our technology and quality leadership," said Hanwha Q Cells’ CEO and chairman, Seong-woo Nam.

"The rollout of Q.ANTUM product lines from our fabs in South Korea and Malaysia will help us increase our market share in key strategic markets with high power class products."

Nam added that the company’s top strategic objectives for the year include investments in areas of the business that will fuel its growth potential, which includes a further embrace of its asset-light initiative that will see Hanwha steer finances to areas that strengthen its core competencies "rather than having such resources locked up with fixed assets".

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