Hanwha SolarOne misses quarterly guidance, but doubles revenues for year

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Hanwha SolarOne released its unaudited financial results for both the fourth quarter 2010 and its full year 2010. While fourth quarter revenue was down 3.3% from 2010’s third quarter, revenue for the full year showed a total of US$1.14 billion (RMB7,527 million), representing over a 99% increase from 2009’s full year revenues that came in at US$574.7 million (RMB3,778.3 million). In its outlook for the 2011 full year, Hanwha anticipates its module shipments to reach between 1GW and 1.2GW with up to 25% of those shipments representing PV module processing services.

Hanwha’s 2010 fourth quarter revenues topped US$320.1 million (RMB2, 112.7 million), a slight decrease from the US$332.5 million (RMB2, 185.7 million) of 3Q10. However, the figures still denote a 68.7% growth from 4Q09. PV module shipments for 4Q10, including module processing services, amounted to 218.8MW, a diminution from 3Q10 223.9MW. Hanwha notes that its net revenue and PV module shipments for 4Q10 were lower than the guidance they released in late February since after their pre-announcement, a 4.1MW PV module order worth US$7.6 million was cancelled. The cancellation was cited as occurring from regulatory conditions in Europe that did not allow the customer to complete its sales contract. Hanwha assures that it intends to sell the PV modules from the order to customers at a later point in time.

Average selling price (ASP) during the 4Q10, with the omission of module processing services, saw an increase to US$1.79 (RMB11.82) per watt from 3Q10 US$1.78 (RMB11.72) per watt, but was down 11.2% compared to 4Q09 US$2.02 (RMB13.31) per watt. An upsurge in the cost of silicon materials such as polysilicon and externally sourced wafers and cells affected Hanwha’s gross margin for 4Q10, which fell from 22.7% in 3Q10 to 20.3%. However, net income attributable to shareholder on a GAAP basis was US$56.2 million during 4Q10, compared to a net loss attributable to shareholders in 3Q10 of US$3.83 million (RMB25.2 million).

Hanwha SolarOne’s outlook for the first quarter of 2011 shows projects module shipments to reach between 235MW and 245MW, with 25-30% of those from PV module processing services. Additionally, ASP, without PV module processing services, is anticipated to fall 5% from 4Q10 under the assumption that the Euro to U.S dollar exchange rate holds steady around 1.36 for the first quarter.

In regards to its full 2010 year results, Hanwha doubled its revenues to over US$1 billion, which can be partially attributed to the 797.9MW of PV module shipments, including module processing services that occurred throughout the year. PV module shipments grew 154% from 2009’s full year total of 313.4MW shipped.

Gross profit for the year also rose to 20.8% from 11.5% in 2009 with an operating margin increase of 15.5% from 3.3% the previous year. Net income attributable to shareholders on a GAAP basis for 2010 was US$114.8 million (RMB757.4 million), compared to a net loss attributable to shareholders of US$22.08 million (RMB145.2 million).

In addition to expecting 1GW to 1.2GW of module shipments during the full 2011 year, Hanwha also notes that its capital expenditures are anticipated to reach US$450 million. Finally, Hanwha’s projected ingot and wafer production capacity for 2011 ranges from 400MW during 1Q2011 to 800MW for 4Q11. The company’s cell production capacity ranges from 650MW during 1Q11 to 1300MW in 4Q11, while its module production capacity is anticipated to reach 900MW during 1Q11 and extend to 1500MW in 4Q11. The full projection for all four quarters can be found in the figure to the left.

Dr. Peter Xie, president and CEO of Hanwha SolarOne, commented, “We concluded the year 2010 with another profitable quarter, a stronger balance sheet, and diversified our shipments towards new longer term growth markets. For the full year, our revenues nearly doubled to over US$1 billion, our shipments rose 155%, and we returned to a healthy level of profitability. We enter 2011 with a high degree of enthusiasm and confidence: our capabilities and brand is strengthened with our strategic partnership with Hanwha, we have good visibility of orders into mid-year, new technology initiatives are progressing towards completion, and significant new capacity will come on stream soon enhancing our ability to meet customer demand and to improve our cost structure.”

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