Major tier-1 integrated PV manufacturer Hanwha Q CELLS said it was mulling over further capacity expansion plans as shipments and revenue rebound after merger with sister company. 

Hanwha Q CELLS (formerly Hanwha SolarOne) said in releasing first quarter 2015 financial results that it was “evaluating additional cell and module capacity additions this year,” while also noting that a second 250MW module assembly line would be operational in South Korea in September 2015. 

Manufacturing update

Seong-woo Nam, Chairman and CEO of Hanwha Q CELLS commented, "A number of manufacturing initiatives are underway. We have upgraded the equipment at our ingot/wafer plant in China, with high utilization and stabilized production. We will continue to reduce costs at this facility. All cell lines at our Malaysia facility are actively being converted to manufacture our next generation cell Q.Antum. We have largely completed the conversion of all module lines in our Qidong, China plant to full automation and are experiencing a 30% improvement in productivity. Our first new module line in Korea, with annual capacity of 250 MW, is currently ramping up and the second line of 250 MW capacity is scheduled to commence operations in September. The new module Fab in Malaysia is under construction and scheduled for mass production beginning in October. We are evaluating additional cell and module capacity additions this year."

Capital expenditures were US$18 million in the first quarter, while production capacity of ingots/wafers stood at 950MW, solar cells at 3.5GW and 2.8GW of PV module capacity at the end of the quarter. 

Solar cell and module capacities are expected to be at least 3.7GW and 3.7GW, respectively, by the end of 2015, according to the company. 

The tier-1 producer also said that the “outlook for the remainder of 2015 remains robust,” guiding module shipments to be between 3.2GW to 3.4GW. 

Before the merger with Hanwha Q CELLS, Hanwha SolarOne reported 2014 module shipments of only just over 1GW, from its 2GW of nameplate capacity. 

The updated shipment guidance would rank Hanwha Q CELLS as potentially the sixth largest PV manufacturer in the world in 2015, behind Trina Solar, Canadian Solar, JA Solar, Yingli Green and JinkoSolar respectively. 

Financials

Hanwha Q CELLS reported first quarter PV module shipments of 547.3MW, of which 33.9MW were to the company's own projects. Total shipments are 35-40% higher than recent quarters for the pre-merger company Hanwha SolarOne.

Total net revenues were US$333.5 million, an increase of 54% from US$217 million in the prior year period. This increase in total net revenues was primarily due to higher shipments resulting from the Q CELLS acquisition, offset partially by lower ASPs. 

Gross profit increased 70% year-over-year to US$48.4 million, while gross margins reached 14.5%. 

Pretax loss was US$18.1 million as compared to a pretax loss of $US10.7 million for the comparable period a year ago primarily as a result of the restructuring charge. Pretax income for the 1Q15 would have been positive US$4 million excluding the restructuring charge. 

"We are pleased to announce our results for the first time as a new company following our strategic merger with Q CELLS. Since the acquisition was closed in February and we incurred one-time charges totaling US$22.1 million related to the acquisition, the first quarter financials do not fully represent the business after the acquisition. The newly formed Company had substantially higher revenues of US$334 million and total shipments of 547.3 MW than the predecessor entity, Hanwha SolarOne, on a standalone basis. Profitability was improved immediately with gross margins approaching 15%, and we returned to pre-tax profitability excluding the aforementioned one-time charges,” added Nam.

Not surprisingly, Japan and the UK were notably strong for shipments in the first quarter, due to end of financial year demand and FiT cuts. Japan was said to have accounted for 24% of its shipments in the quarter. 

However, Hanwha Q CELLS also noted that North America represented 20% of its shipments, bolstered by being able to supply PV modules into the US from its Malaysian plant, circumventing US anti-dumping duties on Chinese and Taiwanese produced products. 

The company recently announced a massive module supply deal with a US project developer boosting demand through 2016. 

Guidance

Hanwha Q CELLS expects second quarter module shipments to be between 650MW to 680MW and gross margins of 15% to 17%. 

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