First quarter revenue and shipments at Hanwha SolarOne increased sequentially, adding to a growing theme that low-cost PV manufacturers can still find customers, despite weak demand. Total net revenues were US$335.2 million, an increase of 3.9% from 4Q10 and an increase of 48.7% from 1Q10. PV module shipments, including module processing services, reached 248.5 MW, an increase of 13.6% from 218.8 MW in 4Q10 and an increase of 65.0% from 1Q10. However, ASP declines and slightly higher material costs resulted in gross margins falling to 16.3% down from 20.3% in 4Q10.
Interestingly, Hanwha SolarOne noted that revenue from Germany actually increased 39% in the quarter, compared to a 25% increase seen in the previous quarter. However, the PV module manufacturer couldn’t buck the trend in Italy in the quarter – reporting revenue decreased from 19% in 4Q10 to 11% in 1Q11.
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Opening-up and developing further markets outside of Europe were also key to revenue generation in the quarter, according to the company. Hanwha SolarOne noted that 9% of sales came from inside China, while the US accounted for 10% of shipments.
Australia remained a relatively strong market for in the quarter, rising to 10% of shipments in 1Q11. Other notable markets were the Netherlands, a port of destination for deliveries to countries throughout Europe, which accounted for 10% of shipments in 1Q11, according to the company.
“During a period of demand uncertainty resulting from regulatory changes in large markets such as Germany and Italy, we are quite pleased that we were able to record good shipment growth during the quarter,” noted Dr. Peter Xie, President and CEO of Hanwha SolarOne. “Although the demand environment for the second quarter of 2011 remains fluid, we are confident that there will be a rebound in the second half of 2011. This, combined with our new lower-cost manufacturing capacity coming on stream, should enable us to achieve improved operating performance as the year progresses.”
Hanwha SolarOne reported ASPs, excluding module processing services of US$1.71/W, down from US$1.82 per watt in 4Q10. The blended cost of goods sold (“COGS”) per watt, excluding module processing services, was US$1.43, representing a 1.4% increase from US$1.41 in 4Q10.
Hanwha SolarOne also saw production costs rise slightly due to an increase in the price of polysilicon and higher costs of using internal wafers in cell production. The cost of polysilicon used in production increased to US$73/kg in 1Q11 from US$67/kg in 4Q10. The Company noted that it expects the price of polysilicon would decline from 2Q11 onwards.
As a result of material cost increases, the production cost (including both silicon and non-silicon costs) using internal wafers was US$1.27 per watt, representing a 5.8% increase from US$1.20 per watt in 4Q10.
The company reiterated production capacity expansion plans for 2011, which would start after the second quarter. Hanwha SolarOne expects module capacity to reach 1.5GW by year end, while cell production should reach 1.3GW. Both ingot and wafer production is targeted to reach 1GW each in 2011.
Cost reduction programs for the year will include and accelerated program to bring slurry recycling in-house and the use of auxiliary materials for wire saw operations. Further cost reduction are targeted towards lost cost module component sourcing as well as improved cell efficiencies and reduced silver paste usage.
However, shipment guidance for the second quarter was set at 200MW, of which about 20% will be for PV module processing services. This is significantly down on first quarter shipments of 248.5MW, indicating a significant inventory overhang in key markets.