Hanwha SolarOne expanding cell and module production

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Tier one PV manufacturer, Hanwha SolarOne, expects to spend around US$80 million on capital expenditure to expand both solar cell and PV module capacity to meet expected module shipment growth of 25% in 2014.

Hanwha SolarOne had held ingot/wafer production in China at 800MW through 2013, while solar cell production remained at 1.3GW and PV module production held at 1.5GW.

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Module shipment expansion plans are being fuelled by continued strong demand in Japan and major plans to build-out its recently announced 1GW project pipeline in China. The company is also continuing to benefit from production tolling agreements with sister company, Hanwha Q CELLS.

“We intend to establish a downstream presence in China and grow our China business by leveraging several recently established strategic partnerships,” stated Ki-Joon Hong, chairman and CEO of Hanwha SolarOne. “We plan to expand capacity to meet growing global demand, as well as automate existing manufacturing to reduce cost and improve product consistency and quality.”

Hanwha SolarOne said it would expand solar cell production to 1.5GW in 2014 and PV module production to 2GW. The company noted that it had successfully started full-scale production of its E-Star II cell at the end of 2013.

PV module lines would continue to be automated to lower production costs, improve quality and reduce material losses as well as reduce required staffing levels, the company noted.

Hanwha SolarOne said that the equipment for the planned module line expansions would be provided by sister company, Hanwha Tech M.

Although the company is not planning to add ingot/wafer production in 2014, the company noted that it would benefit from higher utilization rates, reduced costs and improved yields.

Fourth quarter financial results

Hanwha SolarOne reported fourth quarter 2014 net revenues of US$213.9 million, up 14.1% from the previous quarter. The company reported a gross profit of US$30.2 million in the quarter and an operating loss of US$3.9 million and a net loss of only US$4.2 million.

PV module shipments in the fourth quarter of 2013 reached 352.2MW, a 10.8% increase from 317.3MW in the prior quarter.

On a regional basis, Japan was its main market with more than 150MW shipped, representing 44% of total module shipments, while China shipments stood at 16%. The US shipments remained stable at 11%, while Germany, Korea and Canada remained core markets accounting for 7%, 7% and 5% of shipments in the quarter, respectively.

“The final quarter of 2013 was marked by significantly improved financial results, and when excluding year-end non-cash charges and other non-GAAP accounting treatments unrelated to the operations of our business, we would have recorded profitability,” added Hong. “This financial progress was achieved through increased revenues and shipments, reductions in our manufacturing cost structure, and continued diligence in controlling operating expenses. We maintained a strong presence in Japan and increased our penetration of the fast-growing domestic market in China.”

Full-year financial results

Hanwha SolarOne reported total net revenues in 2013 of US$780.6 million, up 28.5% from the previous year. Gross profit in 2013 was US$55.3 million with a gross margin of 7.1%, compared to a negative gross margin of 8.8% in 2012. Net loss for the year was US$144.4 million.

PV module shipments, including module processing services, primarily for Hanwha Q CELLS reached 1,280.3MW, up 54.3% from 829.8MW in 2012. Module processing services accounted for 8.7% of total revenues in 2013, according to the company.

Guidance

Hanwha SolarOne said it expected first quarter 2014 module shipments to be similar to the preceding quarter at around 350MW. For the full year, module shipments are expected to be in the range of 1.5-1.6GW of which about 25-30% will be for PV module processing services. Gross margins are targeted to be in the range of 15-20%, according to the company.

Although management were upbeat concerning the turnaround in the business and expected return to profitability in 2014 during its earnings call, no financial analysts, if present, asked management any questions.

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