Q4 contraction does not dampen record 2016 for Hanwha Q Cells

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Last week’s report that Hanwha Q Cells had been awarded the tender to construct the 1 GW Konya solar plant in Turkey was a welcome piece of news for the South Korean firm, which posted weaker-than-expected fourth quarter (Q4) 2016 financial revenue of $565.9 million – a 20% sequential drop and a figure 19.4% lower than Q4 2015.

However, despite this Q4 contraction the company’s full year financial performance was strong, with record annual revenue and shipments. Over the course of last year, Hanwha Q Cells’ module shipments reached 4,583 MW, which was a 55% year-on-year (YoY) increase.

Total net revenue for the year was $2,426.6 million, which was 34.8% higher than the $1,800.8 million posted in 2015. Operating income reached $207.5 million – up from $77.9 million in 2015, with net income tripling, up from $43.8 million in 2015 to $120.5 million last year.

As a result, gross profit for the firm reached $454.7 million, compared with $334 million in 2015.

Underpinning this growth was the completion last year of Hanwha Q Cells’ new domestic cell manufacturing facility in Jincheon, just south of Seoul, which boosted the company’s production capacity to 4,150 MW for cells and, subsequently, 4,150 MW for modules.

“We achieved record high total module shipment and revenue in the full year 2016 while establishing solid market positioning in key strategic markets in both mature and emerging countries,” said Hanwha Q Cells CEO Seong-woo Nam “In 2016, we have also successfully ramped up a world-leading PERC cell in-house production capability, now having produced over 3 GW of both mono and multi PERC cells since 2015.”

Speaking of the Konya tender, the CEO said that 1 GW Turkey plant will “help us establish a stronger foothold in the region with great growth potentially”, adding that Hanwha Q Cells has entered into several large module supply contracts that strengthen its sales backlog for the year.

Addressing the poorer-than-expected Q4 results, company CFO Jay Seo said that certain project schedule delays weighed on the weak revenue, while “several other one-time accounting adjustments such as measurement of inventory at the lower of cost or market and asset impairment” also had an impact. Gross profit in Q4 was just $54 million, down from $140.5 million in Q3 and $134.2 million in Q4 2015.

For Q1 2017, Hanwha Q Cells estimates net revenue in the range of $410 to $430 million. The company is sticking by its decision to not publish quarterly shipment figures or guidance, but did project annual shipment figures for this year in the range of 5,500 to 5,700 MW.