Hanwha SolarOne Reports Fourth Quarter 2011 and Full Year 2011 Results
SHANGHAI, March 15, 2012 /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 December 31, 2011. The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) onMarch 15, 2012. A slide presentation with details of the results will also be available on the Company's website prior to the call.
FOURTH QUARTER 2011 HIGHLIGHTS
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Total net revenues were RMB978.3 million (US$155.4 million), a decrease of 31.9% from 3Q11, and a decrease of 53.8% from 4Q10.
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PV module shipments, including module processing services, were 189.1 MW, a decrease of 5.9% from 200.9 MW in 3Q11, and a decrease of 13.6% from 218.8 MW in 4Q10.
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Average selling price ("ASP"), excluding module processing services, decreased to RMB6.29 per watt (US$1.00) from RMB7.86 per watt in 3Q11, and decreased from RMB11.82 per watt in 4Q10.
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The Company recorded certain non-cash charges totaling RMB596.7 million (US$94.8 million), including RMB119.8 million (US$19.0 million) from inventory write-down, RMB342.2 million (US$54.4 million) from provisions for advance payments on the Company's purchase commitment under long-term supply contracts, and RMB134.7 million (US$21.4 million) from goodwill impairment.
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Gross loss increased 289.5% to RMB604.6 million (US$96.1 million) from a gross loss of RMB155.2 million in 3Q11, compared to a gross profit ofRMB465.0 million in 4Q10. Gross loss in 4Q11 included the non-cash charges from inventory write-down and provisions for advance payments associated with long-term supply contracts totaling RMB407.5 million (US$64.7 million).
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Gross margin decreased to negative 61.8%, compared with negative 10.8% in 3Q11, due to both the lower ASP and the non-cash charges from inventory write-down and provisions for advance payments associated with long-term supply contracts. Gross margin in 4Q10 was positive 21.9%. Gross margin excluding the aforementioned provisions would have been negative 20.1% in 4Q11.
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Operating loss increased by 206.7% to RMB1,005.2 million (US$159.7 million) from an operating loss of RMB327.8 million in 3Q11, compared to an operating profit of RMB302.5 million in 4Q10. The increase in operating loss in 4Q11 from 3Q11 was primarily due to the significantly higher gross loss, higher selling and general and administrative expenses, and RMB134.7 million (US$21.4 million) from goodwill impairment.
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Operating margin decreased to negative 102.8% from negative 22.8% in 3Q11, compared with positive 14.3% in 4Q10.
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Net loss attributable to shareholders on a non-GAAP basis(1) was RMB862.3 million (US$137.0 million), compared with net loss of RMB295.7 million in 3Q11 and net income of RMB250.7 million in 4Q10.
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Net loss per basic ADS on a non-GAAP basis was RMB10.22 (US$1.62), compared with net loss per basic ADS of RMB3.51 in 3Q11 and net income per ADS on a non-GAAP basis of RMB3.39 in 4Q10.
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Net loss attributable to shareholders on a GAAP basis was RMB832.9 million (US$132.3 million), compared with net loss attributable to shareholders on a GAAP basis of RMB177.6 million in 3Q11. The Company recorded a non-cash gain of RMB33.2 million (US$5.3 million) from the change in fair value of the convertible feature of the Company's convertible bonds as compared to a non-cash gain of RMB131.4 million in 3Q11. Net income attributable to shareholders on a GAAP basis in 4Q10 was RMB370.8 million, including a non-cash gain of RMB255.6 millionfrom the change in fair value of the convertible feature of the Company's convertible bonds. As explained in prior quarters, the fluctuations in the fair value of the convertible feature of the Company's convertible bonds are primarily due to changes in the Company's ADS price, over which the Company has no direct control, and does not reflect the operating performance of the Company.
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Net loss per basic ADS on a GAAP basis was RMB9.88 (US$1.57), compared with net loss per basic ADS on a GAAP basis of RMB2.11 in 3Q11 and a net income per basic ADS on a GAAP basis of RMB5.02 in 4Q10.
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Annualized Return on Equity ("ROE") on a non-GAAP basis was negative 81.5% in 4Q11, compared with negative 24.6% in 3Q11 and positive 24.1% in 4Q10.
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Annualized ROE on a GAAP basis was negative 70.6% in 4Q11, compared to negative 13.6% in 3Q11 and positive 33.2% in 4Q10.
FULL YEAR 2011 HIGHLIGHTS
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Total net revenues were RMB6,416.5 million (US$1,019.5 million), representing a decrease of 15.0% from RMB7,548.5 million in 2010.
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PV module shipments, including module processing services, reached 844.4 MW, representing an increase of 5.8% from 797.9 MW in 2010. Module processing services accounted for 8.5% of total shipment revenues in 2011.
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The Company recorded total non-cash charges of RMB835.1 million (US$132.7 million), including RMB358.1 million (US$56.9 million) from inventory write-down as a result of a lower of cost or market assessment and a regular provision for obsolescence, RMB342.2 million (US$54.4 million) from provisions for advance payments associated with long-term supply contracts, and RMB134.7 million (US$21.4 million) from goodwill impairment. The inventory write-down and a portion of the provisions for advance payments were classified in cost of goods sold. The remaining provisions for advance payments and the goodwill impairment were classified as operating expenses.
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Gross loss in 2011 was RMB217.1 million (US$34.5 million), compared with a gross profit of RMB1,679.0 million in 2010.
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Gross margin was negative 3.4%, compared with positive 22.2% in 2010.
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Operating loss for 2011 was RMB1,096.4 million (US$174.2 million), compared with an operating profit of RMB1,184.5 million in 2010.
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Operating margin decreased to negative 17.1%, compared with positive 15.7% in 2010.
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Net loss attributable to shareholders on a non-GAAP basis(1) was RMB1,068.5 million (US$169.8 million), compared with net income attributable to shareholders of RMB914.3 million in 2010.
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Net loss per basic ADS on a non-GAAP basis was RMB12.71 (US$2.03), compared with net income per basic ADS of RMB14.68 in 2010.
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Net loss attributable to shareholders on a GAAP basis was RMB930.1 million (US$147.8 million), compared with net income attributable to shareholders of RMB757.4 million in 2010.
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Net loss per basic ADS on a GAAP basis was RMB11.06 (US$1.76), compared with net income per basic ADS of RMB12.17 in 2010.
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ROE on a non-GAAP basis was negative 24.8% in 2011, compared with positive 25.7% in 2010.
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ROE on a GAAP basis was negative 19.6% in 2011, compared with positive 18.9% in 2010.
Mr. Ki-Joon HONG, Chairman and CEO of Hanwha SolarOne, commented, "The year 2011 was a period of adjustment and consolidation for the industry. Excess capacity throughout the solar value chain, combined with incentive reductions in key markets, drove selling prices down at a rate faster than input costs, resulting in pressure on profitability. We believe the Company continued to make progress in a number of areas, including growing synergies with our largest shareholder Hanwha. We continued to invest in branding, technology, management systems and people. We also made progress in reducing non-poly processing costs in spite of reduced utilization, penetrated new important growth markets including the US andChina, and increased shipments nearly 20%. Hanwha remains unwavering in its support for the solar market overall and for our Company. The business environment will remain challenging for much, if not all, of 2012. Our balance sheet is strong and our access to additional capital remains in place. Looking forward, we believe that lower prices will drive additional demand, the industry will consolidate at an accelerated pace, and we will exit this downturn in a strong competitive position."
FOURTH QUARTER 2011 RESULTS
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Total net revenues were RMB978.3 million (US$155.4 million), a decrease of 31.9% from RMB1,437.3 million in 3Q11, and a decrease of 53.8% from RMB2,119.0 million in 4Q10. The decrease in total net revenues in 4Q11 compared with 3Q11 was primarily due to lower shipments and reduced ASP.
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Revenue contribution from PV module processing services as a percentage of total net revenues was 8.9%, compared with 7.2% in 3Q11.
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PV module shipments, including module processing services, were 189.1 MW, a decrease from 200.9 MW in 3Q11, and a decrease from 218.8 MW in 4Q10.
(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-a)
(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-b)
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Module revenue attributable to shipments to the U.S. grew from 13% in 3Q11 to 33% in 4Q11, due to a spike in demand before the expiration of cash grant from the government. The China market remained solid for the Company and increased from 7% in 3Q11 to 13% of module revenue in 4Q11. India, a relatively new and potentially attractive market for the Company, rose to 11% of module revenue in 4Q11. Module revenue attributable to shipments to Germany decreased to 23% in 4Q11 from 45% in 3Q11, while module revenue attributable to shipments to Italyremained stable at 2% as compared to 3Q11. In 2011, module revenue attributable to shipments to Europe, Middle East and Africa (EMEA) were 53% of the total module revenue, with Asia accounting for 20%, North America 19% and Australia 8%.
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Average selling price ("ASP"), excluding module processing services, decreased to RMB6.29 per watt (US$1.00) from RMB7.86 per watt in 3Q11 from RMB11.82 per watt in 4Q10.
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Gross loss of 4Q11 was RMB604.6 million (US$96.1 million), compared with a gross loss of RMB155.2 million in 3Q11 and a gross profit ofRMB465.0 million in 4Q10.
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Gross margin decreased to negative 61.8%, compared with negative 10.8% in 3Q11, due to both the lower ASP and the non-cash charges from inventory write-down and provisions for advance payments on the Company's purchase commitment under long-term supply contracts. Gross margin in 4Q10 was 21.9%.
(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-c)
(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-d)
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The blended cost of goods sold ("COGS") per watt, excluding module processing services, was US$1.61 (including $0.45 non-cash charges from inventory write-down and provisions for advance payments associated with long-term supply contract), representing a 19.3% increase fromUS$1.35 in 3Q11. 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. Excluding non-cash charges, the Company would have achieved a 1.7% reduction in blended COGS to $1.16.
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The production cost (including both silicon and non-silicon costs) using internally sourced wafers was US$1.03 per watt, representing a 8.8% decrease from US$1.13 per watt in 3Q11. The decrease was primarily due to reduced polysilicon costs as well as operational improvements.
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Operating loss of 4Q11 was RMB1,005.2 million (US$159.7 million), compared with an operating loss of RMB327.8 million in 3Q11 and an operating profit of RMB302.5 million in 4Q10. Operating margin decreased to negative 102.8% from negative 22.8% in 3Q11, compared to positive 14.3% in 4Q10.
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Operating expenses as a percentage of total net revenues were 40.9% in 4Q11, compared with 12.0% in 3Q11 and 7.7% in 4Q10. The higher operating expenses in 4Q11 compared with 3Q11 was primarily due to higher selling expenses, general and administrative expenses, and the adverse impact from RMB54.5 million (US$8.7 million) provisions for advance payments associated with long-term supply contracts as well asRMB134.7 million (US$21.4 million) goodwill impairment.
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Interest expense was RMB41.7 million (US$6.6 million), compared with RMB47.2 million in 3Q11 and RMB40.7 million in 4Q10.
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The Company recorded a net loss of RMB0.1 million (US$0.02 million), which combined a foreign exchange loss with a loss from the change in fair value of derivatives. The Company recorded a net gain of RMB0.4 million in 3Q11 and a net gain of RMB1.3 million in 4Q10 for the foreign exchange loss and the gain from change in fair value of derivatives.
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Gain from the change in fair value of the conversion feature of the Company's convertible bonds was RMB33.2 million (US$5.3 million), compared with RMB131.4 million in 3Q11 and RMB255.6 million in 4Q10. The fluctuations resulting from the adoption of ASC 815-40 on January 1, 2009, 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 benefit in 4Q11 increased to RMB179.9 million (US$28.6 million), compared with RMB65.4 million in 3Q11 and income tax expense ofRMB148.9 million in 4Q10.
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Net loss attributable to shareholders on a non-GAAP basis(1) was RMB862.3 million (US$137.0 million), compared with a net loss attributable to shareholders of RMB295.7 million in 3Q11 and a net income attributable to shareholders of RMB250.7 million in 4Q10.
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Net loss per basic ADS on a non-GAAP basis was RMB10.22 (US$1.62), compared with net loss per basic ADS on a non-GAAP basis of RMB3.51in 3Q11 and net income per basic ADS on a non-GAAP basis of RMB3.39 in 4Q10.
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Net loss attributable to shareholders on a GAAP basis was RMB832.9 million (US$132.3 million), compared with net loss attributable to shareholders of RMB177.6 million in 3Q11 and net income attributable to shareholders of RMB370.8 million in 4Q10.
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Net loss per basic ADS on a GAAP basis was RMB9.88 (US$1.57), compared with net loss per basic ADS of RMB2.11 in 3Q11 and net income per basic ADS of RMB5.02 in 4Q10.
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Annualized ROE on a non-GAAP basis was negative 81.5% in 4Q11, compared with negative 24.6% in 3Q11 and positive 24.1% in 4Q10.
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Annualized ROE on a GAAP basis was negative 70.6% in 4Q11, compared with negative 13.6% in 3Q11 and positive 33.2% in 4Q10.
FINANCIAL POSITION
As of December 31, 2011, the Company had cash and cash equivalents of RMB1,976.6 million (US$314.0 million) and net working capital ofRMB908.3 million (US$144.3 million), compared with cash and cash equivalents of RMB1,835.2 million and net working capital of RMB1,778.2 millionas of September 30, 2011. Total short-term bank borrowings (including the current portion of long-term bank borrowings) were RMB2,006.9 million(US$318.9 million), compared with RMB1,683.7 million as of September 30, 2011. The increase in short-term borrowings was primarily for working capital needs.
As of December 31, 2011, the Company had total long-term debt of RMB1,851.0 million (US$294.1 million), which comprised both long-term bank borrowings and convertible notes payable. The Company's long-term bank borrowings are to be repaid in installments until their maturities ranging from 2 to 5 years. Holders of the convertible notes have the option to require the Company to redeem the notes beginning on January 15, 2015.
Net cash generated from operating activities in 4Q11 was RMB311.3 million (US$49.5 million), compared with net cash used in operating activities ofRMB432.1 million in 3Q11 and net cash generated from operating activities of RMB50.4 million in 4Q10.
As of December 31, 2011, accounts receivable were RMB537.5 million (US$85.4 million), compared with RMB1,252.5 million as of September 30, 2011 and RMB1,282.8 million&
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