SHANGHAI, May 24, 2011 /PRNewswire/ -- Hanwha SolarOne Co., Ltd. ("SolarOne" or the "Company") (Nasdaq: HSOL), a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic ("PV") cells and modules in China, today reported its unaudited financial results for the quarter ended March 31, 2011. The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) on May 24, 2011 . A slide presentation with details of the results will also be available on the Company's website prior to the call.
FIRST QUARTER 2011 HIGHLIGHTS
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Total net revenues were RMB2,194.8 million (US$335.2 million), an increase of 3.9% from 4Q10 and an increase of 48.7% from 1Q10.
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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.
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Average selling price ("ASP"), excluding module processing services, decreased to RMB11.23 per watt (US$1.71) from RMB11.82 per watt in 4Q10.
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Gross profit decreased 16.7% to RMB356.9 million (US$54.5 million) from RMB428.7 million in 4Q10, and increased 31.0% from RMB272.5 millionin 1Q10.
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Gross margin decreased to 16.3% from 20.3% in 4Q10, primarily due to a combination of a decline in ASP and an increase in raw material costs. Gross margin in 1Q10 was 18.5%.
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Operating profit declined 14.3% to RMB253.9 million (US$38.8 million) from RMB296.2 million in 4Q10 and increased 28.0% from RMB198.4 million in 1Q10. The sequential decrease in operating profit was primarily due to the lower gross profit and was partially offset by lower operating expenses.
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Operating margin decreased to 11.6% from 14.0% in 4Q10 and 13.4% in 1Q10.
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Net income attributable to shareholders on a non-GAAP basis(1) was RMB154.4 million (US$23.6 million), a decrease of 38.4% from RMB250.7 million in 4Q10 and a decrease of 2.3% from RMB158.1 million in 1Q10.
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Net income per basic ADS on a non-GAAP basis(1) was RMB1.84 (US$0.28), a decrease of 45.7% from RMB3.39 in 4Q10 and a 32.6% decline from 1Q10.
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Net income attributable to shareholders on a GAAP basis was RMB149.4 million (US$22.8 million), compared with net income attributable to shareholders of RMB370.8 million and RMB138.9 million in 4Q10 and 1Q10, respectively.
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Net income per basic ADS on a GAAP basis was RMB1.78 (US$0.27), compared with net income per basic ADS on a GAAP basis of RMB5.02 in 4Q10 and RMB2.40 in 1Q10.
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Annualized Return on Equity ("ROE") on a non-GAAP basis(1) was 12.6% in 1Q11, compared with 24.1% in 4Q10 and 26.6% in 1Q10.
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Annualized ROE on a GAAP basis was 11.3% in 1Q11, compared with 33.2% in 4Q10 and 19.2% in 1Q10.
Dr. Peter Xie, President and CEO of Hanwha SolarOne, commented, "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. 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."
FIRST QUARTER 2011 RESULTS
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Total net revenues were RMB2,194.8 million (US$335.2 million), an increase of 3.9% from RMB2,112.7 million in 4Q10 and an increase of 48.7% from 1Q10. The increase compared with 4Q10 was primarily due to higher shipments, and was somewhat offset by the lower average selling price.
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Revenue contribution from PV module processing services as a percentage of total net revenues was 10.7%, compared with 8.0% in 4Q10 and 7.8% in 1Q10.
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PV module shipments, including module processing services, reached 248.5 MW, an increase of 13.6% from 218.8 MW in 4Q10 and 150.6 MW in 1Q10.
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Module revenue attributable to Germany increased to 39% in 1Q11 from 25% in 4Q10. Italy decreased from 19% in 4Q10 to 11% in 1Q11, largely due to the pending regulatory changes announced during 1Q11. Newer growth markets such as China and the United States remained vibrant, totaling 9% and 10% of shipments, respectively, 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. This was an increase from 7% in the prior quarter. Australiaremained a consistently strong market for the Company, rising to 10% of shipments in 1Q11.
(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-a)
(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-b)
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Average selling price ("ASP"), excluding module processing services, decreased to RMB11.23 per watt (US$1.71) from RMB11.82 per watt in 4Q10.
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Gross profit decreased 16.7% to RMB356.9 million (US$54.5 million) from RMB428.7 million in 4Q10 and rose 31.0% from RMB272.5 million in the same quarter a year ago.
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Gross margin decreased to 16.3% from 20.3% in 4Q10, primarily due to a combination of a decline in ASP and an increase in raw material costs. Gross margin in 1Q10 was 18.5%.
(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-c)
(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-d)
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The blended cost of goods sold ("COGS") per watt, excluding module processing services, was US$1.43, representing a 1.4% increase fromUS$1.41 in 4Q10. The blended COGS takes into account the production cost (silicon and non-silicon) using internally sourced wafers, purchase costs and additional processing costs of externally sourced wafers and cells, as well as freight costs.
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The production cost (including both silicon and non-silicon costs) using internal wafers was US$1.27 per watt, representing a 5.8% increase fromUS$1.20 per watt in 4Q10. The increase was primarily due to an increase in the price of polysilicon. The cost of polysilicon used in our production increased to US$73/kg in 1Q11 from US$67/kg in 4Q10. The Company believes the price of polysilicon peaked in 1Q11 and will decline from 2Q11 onwards.
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Operating profit decreased 14.3% to RMB253.9 million (US$38.8 million) from RMB296.2 million in 4Q10. Operating margin decreased to 11.6% from 14.0% in 4Q10. In 1Q10, the operating profit was RMB198.4 million and the operating margin was 13.4%.
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Operating expenses as a percentage of total net revenues were 4.7% in 1Q11, compared with 6.3% in 4Q10 and 5.0% in 1Q10. The lower operating expenses in 1Q11 compared with 4Q10 were primarily due to a reversal of accrued operating expenses.
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Interest expense was RMB41.8 million (US$6.4 million), compared with RMB40.7 million in 4Q10 and RMB40.9 million in 1Q10.
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The Company recorded a net foreign exchange loss of RMB36.8 million (US$5.6 million), compared with a net foreign exchange gain of RMB1.3 million in 4Q10 and RMB3.7 million in 1Q10.
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Gain from the change in fair value of the conversion feature of the Company's convertible bonds was RMB47.9 million (US$7.3 million), compared with a gain of RMB255.6 million in 4Q10 and a loss of RMB2.5 million in 1Q10. The fluctuations resulting from applying ASC 815-40 were primarily due to changes in the Company's ADS price during the quarter. This line item has fluctuated, and is expected to continue to fluctuate quarter-to-quarter. The Company has no direct control over the fluctuations.
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Income tax expense in 1Q11 decreased to RMB84.3 million (US$12.9 million) compared with RMB148.9 million in 4Q10 and RMB21.4 million in 1Q10. As noted in the prior quarter, the Company recorded incremental tax expenses relating to an uncertain tax position of its subsidiary as to whether the subsidiary continues to satisfy the criteria as a High and New Technology Enterprise ("HNTE"). The Company recorded incremental tax expenses of RMB30.1 million (US$4.6 million) in 1Q11, compared with RMB116.1 million in 4Q10.
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Net income attributable to shareholders on a non-GAAP basis(1) was RMB154.4 million (US$23.6 million), a decrease of 38.4% from RMB250.7 million in 4Q10 and a decrease of 2.3% from RMB158.1 million in 1Q10.
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Net income per basic ADS on a non-GAAP basis(1) was RMB1.84 (US$0.28), a decrease of 45.7% from RMB3.39 in 4Q10 and a 32.6% decline from RMB2.73 in 1Q10.
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Net income attributable to shareholders on a GAAP basis was RMB149.4 million (US$22.8 million), compared with net income of RMB370.8 millionfor 4Q10.The 1Q11 amount is 7.5% higher than the same figure for 1Q10.
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Net income per basic ADS on a GAAP basis was RMB1.78 (US$0.27), compared with net income per basic ADS of RMB5.02 in 4Q10 and RMB2.40for 1Q10.
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Annualized ROE on a non-GAAP basis(1) was 12.6% in 1Q11, compared with 24.1% in 4Q10 and 26.6% in 1Q10.
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Annualized ROE on a GAAP basis was 11.3% in 1Q11, compared to 33.2% in 4Q10 and 19.2% in 1Q10.
FINANCIAL POSITION
As of March 31, 2011, the Company had cash and cash equivalents of RMB1,354.4 million (US$206.8 million) and net working capital of RMB2,486.3 million (US$379.7 million), compared with cash and cash equivalents of RMB1,630.8 million and net working capital of RMB3,179.9 million as ofDecember 31, 2010. Total short-term bank borrowings and the current portion of long-term bank borrowings was RMB987.2 million (US$150.8 million), compared with RMB533.9 million as of December 31, 2010. The increase was because the Company drew down some of its bank credit facilities to finance its 2011 capital expenditure program.
As of March 31, 2011, the Company had total long-term debt of RMB748.1 million (US$114.3 million), which was comprised of both the non-current portion of long-term bank borrowings and convertible bonds. The Company's long-term bank borrowings are to be repaid in installments until their maturities in 2011 and 2012. Holders of the convertible bonds, which have a final maturity in 2018, have an option to require the Company to redeem the bonds on January 15, 2015.
Net cash used in operating activities in 1Q11 was RMB67.5 million (US$10.3 million), compared with net cash generated from operating activities ofRMB50.4 million in 4Q10. Net cash used in operating activities in 1Q10 was RMB5.4 million.
As of March 31, 2011, accounts receivable were RMB1,722.0 million (US$263.0 million) compared with RMB1,282.8 million as of December 31, 2010. Days sales outstanding increased to 62 days in 1Q11 from 55 days in 4Q10 and 47 days in 1Q10.
As of March 31, 2011, inventories increased to RMB990.7 million (US$151.3 million) from RMB790.8 million as of December 31,2010. Days inventory was 44 days in 1Q11 compared with 40 days in 4Q10 and 57 days in 1Q10.
Capital expenditures were RMB618.1 million (US$94.4 million) in 1Q11.
CAPACITY EXPANSION
Details on the Company's annual production capacities and expected annual production capacities as of end of the stated quarter are as follows:
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Capacity ramp-up plan
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End of
Q4 2010
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End of
Q1 2011
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End of
Q2 2011
(Projected)
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End of
Q3 2011
(Projected)
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End of
Q4 2011
(Projected)
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Ingot
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MW
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400
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400
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415
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650
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1,000
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Wafer
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MW
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400
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450
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500
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700
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1,000
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Cell
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