Hanwha SolarOne Reports 2Q 2013 Results

Hanwha SolarOne Co., Ltd. reported its unaudited financial results for the quarter ended June 30, 2013.

Total net revenues in the second quarter of 2013 were RMB1,182.8 million (US$192.7 million), an increase of 6.3% from RMB1,112.9 million in 1Q13, and an increase of 10.4% from RMB1,071.7 million in 2Q12. The increase in total net revenues in 2Q13 compared with 1Q13 was primarily due to higher shipments, lower costs and stable ASP.

“We recorded a solid performance for the second quarter ending June, including further gross margin improvement reflecting an improved cost structure and better factory utilization, an 11% quarter-over quarter shipment gain and a return to positive operating cash flow,” Ki-Joon Hong, chairman and CEO of Hanwha SolarOne, commented. “Shipments of 321 MW were the highest quarterly level since Hanwha’s purchase of the predecessor company in September 2010. Our presence in emerging markets such as Japan and South Africa remained strong. We also strengthened our liquidity position with a US$100 million long-term loan from the Export-Import Bank of Korea.

“Solar industry conditions continue to improve and we remain optimistic for the remainder of 2013 and beyond,” Chairman Hong continued. “ We should continue to enjoy success in Japan and we expect to see improved volumes in the important China market. With the EU and China having reached agreement on import duties, we believe our market allocation and higher pricing will lead to good opportunity there. We look towards improving our presence in other emerging markets including South America, the Middle East and Southeast Asia. Our manufacturing module services business with Hanwha Q CELLS should see improved volumes during the second half of this year. We are also continuing to make progress in innovation with the planned introduction of our second-stage E Star module later this year with improved performance and lower manufacturing costs.”

PV module shipments, including module processing services, were 321.2 MW, an increase from 289.1 MW in 1Q13, and an increase from 230.7 MW in 2Q12.

Module shipments to Japan, a market that values quality and brand, remained stable at 34% in 2Q13 at a good pricing level. Shipments to South Africa continued this quarter, representing 20% of revenues. The German market remained solid for the company and made up 12% of total module shipments in 2Q13.The US (7%), China (4%) and the UK (3%) continued to be a mainstay of the company’s dispersion of shipments. Korea came to the forefront this quarter as a notable new market for the company accounting for 5% of shipments in 2Q13.

The company continues to actively diversify its business outside the EU in order to minimize the risk from the ongoing trade dispute with the region; therefore shipments to Europe declined to 26% of total shipments. The company shipped PV modules to 29 countries during 2Q13, further diversifying the geographic spread. Shipments to Europe and Africa (EA) contributed 46% to total module shipments, Asian Pacific (AP) accounted for 46% and North America (NA) 8%.

Average selling price (ASP), excluding module processing services, decreased to RMB4.03 per watt (US$0.66) from RMB4.12 per watt in 1Q13 and from RMB4.85 per watt in 2Q12.

Gross profit for 2Q13 was RMB65.3 million (US$10.6 million), compared with a gross profit of RMB28.9 million in 1Q13 and a gross profit of RMB67.5 million in 2Q12.

Operating loss of 2Q13 was RMB122.1 million (US$19.9 million), compared with an operating loss of RMB128.2 million in 1Q13 and an operating loss of RMB82.8 million in 2Q12. Operating margin increased to negative 10.3% from negative 11.5% in 1Q13, compared to negative 7.7% in 2Q12.

As of June 30, 2013, the company had cash and cash equivalents of RMB1,418.6 million (US$231.1 million) and net working capital of RMB884.2 million (US$144.1 million), compared with cash and cash equivalents of RMB1,005.0 million and net working capital of RMB345.7 million as of March 31, 2013.

The company returned to positive operating cash flow as net cash provided in operating activities in 2Q13 was RMB494.8 million (US$80.6 million), compared with net cash used in operating activities of RMB54.4 million in 1Q13 and net cash used in operating activities of RMB335.5 million in 2Q12.