Hanwha SolarOne Reports 2Q 2012 Results

Hanwha SolarOne Co., Ltd., a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic (PV) cells and modules in China, reported its unaudited financial results for the quarter ended June 30, 2012.

Total net revenues were RMB1,071.7 million (US$168.7 million), an increase of 33.3% from 1Q12, and a decrease of 40.4% from 2Q11. PV module shipments, including module processing services, were 230.7 MW, an increase of 43.6% from 160.7 MW in 1Q12, and an increase of 12.0% from 205.9 MW in 2Q11.

Average selling price (ASP), excluding module processing services, decreased to RMB4.85 per watt (US$0.77) from RMB5.30 per watt in 1Q12, and decreased from RMB10.09 per watt in 2Q11. Gross profit was RMB67.5 million (US$10.6 million), compared with a gross loss of RMB75.2 million in 1Q12 and gross profit of RMB162.9 million in 2Q11.

Gross margin was 6.3%, compared with negative 9.4% in 1Q12, due to the decline in production costs outpacing the decline in ASP, and higher factory utilization which was driven by higher shipment volumes. Gross margin in 2Q11 was positive 9.1%.

Operating loss decreased to RMB82.8 million (US$13.0 million) from an operating loss of RMB220.9 million in 1Q12. The company recorded an operating loss of RMB25.7 million in 2Q11. The decrease in operating loss in 2Q12 from 1Q11 was primarily due to the return to gross profitability and tight control of operating expenses.

“In spite of a difficult operating environment, we achieved some good progress during the second quarter,” said Ki-Joon Hong, chairman and CEO of Hanwha SolarOne. “Our shipment volumes grew nicely quarter-to-quarter, our production costs continued to improve and now are in reach of our year-end target, and we are increasingly seeing synergies with our parent company, particularly in downstream activities. We remain optimistic that our presence in large new growth markets such as China, Japan and the U.S., will provide incremental volume potential in the second half of 2012.

“Challenging industry conditions remain: overcapacity, a spike in manufacturer’s inventories, declining prices and regulatory issues pertaining to duties in the U.S. and possibly Europe,” Hong added. “In spite of these, we continue to move forward with our long-term goals, in concert with support from our largest shareholder, and believe we have established the brand, competitive cost structure, balance sheet and management team to enter the next growth stage of the industry.”

Germany accounted for 57% of total shipments. Europe and Africa accounted for 76% of total shipments. Other significant markets in Europe included England, Italy and Spain, representing 5%, 4% and 4% of total shipments, respectively. The Asia Pacific region accounted for 17% of total shipments, including Korea (3%), Australia (3%), Japan (2%) and China (2%). Shipments to North America, including the U.S., represented 7% of total shipments.