Hanwha Q Cells' Q2 profit soars to $151 million

South Korean solar module producer Hanwha Q Cells has posted a gross profit of $151.2 million in the second quarter (Q2) of the year as revenue, margin and operating income all improved considerably on a sequential and annual basis.

Revenue of $638 million was substantially higher than Q1 ($514.9 million), and represented a huge year-over-year increase on Q2 2015, when the company posted anemic revenue of $338 million.

Operating income for Q2 2016 hit $84.5 million, up from $56.7 million in Q1 and far higher than the $1 million posted a year ago. This meant that gross margin reached 23.7%, which is the highest the company has achieved since the merger of Q Cells and SolarOne in 2015.

Hanwha Q Cells maintained stable operating expenses as a percentage of revenue, at 10.5% compared to 10.2% in Q1 and 17% in Q2 2015. The firm increased its R%D expenditure by 20% to $14 million for the quarter, and also saw its selling and marketing expenses increase sequentially by 45.2% to reach $33.1 million.

Net income attributable to the company’s ordinary shareholders, meanwhile, was $76.8 million, which was a sizeable increase on the $27.5 million in Q1, and the net loss of $-14.2 million registered in Q2 last year.

At the end of Q2, Hanwha Q Cells boasted cash and cash equivalents of $255.4 million, which was below the $327.3 million on its books at the end of Q1, but short-term borrowings contracted by $71 million over that time frame. Long-term debt, however, increased by $151.6 million to reach $799.6 million.

This solid overall quarterly execution of its operations exceeded financial targets, said Hanwha Q Cells CEO and chairman Seong-woo Nam, who praised the firm’s "disciplined yet flexible" global operations and ability to adapt to changing market conditions.

"We continue to improve our financial positions and cash management to support our growing business rationally," he said. "This year we are maintaining net debt to equity ratio below 250% level and our cash conversion cycle has fallen below 60 days compared to over 100 days a year ago."

The CEO added that Hanwha Q Cells remains optimistic about the long-term growth prospects of the solar industry and the firm’s place within it. Its outlook for the entire year forecasts total module shipments of between 4.8 to 5 GW, capacity expansion investment of $100 million and a further $80 million expenditure on technology upgrades and R&D.