Hanwha SolarOne lowers solar module shipment guidance but building module plant in Korea

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Tier 1 PV module manufacturer, Hanwha SolarOne reported increased revenue on the back of increased module shipments, primarily to China in the third quarter of 2014.

The company reported third quarter revenue of US$195.2 million, an increase of 8.2% from the previous quarter as shipments including module processing services for Hanwha Q CELLS, increased 9.9% quarter-on quarter to 373.2MW. Module processing services accounted for approximately 10% of revenues. 

PV module shipments within China increased dramatically, accounting for 30% of revenue in the quarter, compared to only 6% in the second quarter of 2014. 

However, Japan remained its largest market, accounting for 43% of revenue but down from 53% in the previous quarter, indicative of the slowdown in demand in Japan after the introduction of a consumer tax.

PV module shipments were made to 25 separate countries, with Europe and Africa contributing 9% to total module shipments, Asia Pacific accounted for 83% and North America only 8%. North America accounted for only 5% of revenue in the quarter, compared to 11% in the previous quarter. 

Seong-woo Nam, chairman and CEO of Hanwha SolarOne said: “Noticeable progress was made in penetrating the large and growing domestic market in China. Shipments to China reached 30% of our total volume, over a 400% quarter-over-quarter gain. We signed several substantial module supply agreements and have increased our pipeline of potential downstream projects. We continued to maintain a strong presence in the important Japanese market.”

Despite improved shipments and revenue, Hanwha SolarOne continued to post losses. 

Operating loss was US$11.9 million, compared with an operating loss of US$6.5 million in the previous quarter, primarily due to lower ASPs as shipments to China increased. Operating margin decreased to negative 6.1% from negative 3.6%. The company recorded a net loss US$11.6 million in the quarter.

Manufacturing update 

Hanwha SolarOne noted that production capacity at the end of the quarter was 800MW for ingot and wafer, 1.3GW for solar cells and 1.5GW for modules. The company said it was on target to expand cell and module capacities to at least 1.5GW and 2.0 GW, respectively by the end of 2014.

The company's cost structure improved in light of increased utilization and improved manufacturing efficiencies at ingot and wafer production facilities, while lower polysilicon costs, increased automation, and new product introductions that use fewer raw materials such as 72-cell modules also contributed to lower production costs.

Capital expenditures were US$21.0 million in the quarter and the company guided capital expenditures of US$80 million in the fourth quarter. 

The company also confirmed media reports that it would be establishing a 230MW module assembly plant in South Korea, beginning production in the first half of 2015 and costing US$30 million.

Currently the company is supplying the US market with Chinese made product under the 2012 US anti-dumping tariff rules. The establishment of a South Korean production plant is intended to circumvent the tariffs and the company is targeting to ship between 300MW and 400MW of modules to the US in 2014. Media reports had focused on the company establishing the plant to meet growing demand in South Korea.

Full-year guidance increased 

Hanwha SolarOne guided fourth quarter 2014 module shipments to be in the range of 400MW to 425MW and full-year module shipments to be between 1.43GW to 1.46GW, down from previous guidance of 1.5GW to 1.6GW. PV module processing services, would account for 25% to 30% of shipments in 2014.

Management noted in its earnings call that demand would lead to similar shipments levels as guided in the fourth quarter through into the first quarter of 2015, due to demand in China and the UK.

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