Hanwha SolarOne Q3 Results
THIRD QUARTER 2011 HIGHLIGHTS
• Total net revenues were RMB 1,437.3 million (US$225.4 million), a decrease of 20.1% from 2Q11 and a decrease of 34.4% from 3Q10.
• PV module shipments, including module processing services, were 200.9 MW, a decrease of 2.5% from 205.9 MW in 2Q11 and a decrease of 10.3% from 3Q10.
• Average selling price ("ASP"), excluding module processing services, decreased to RMB7.86 per watt (US$1.23) from RMB10.09 per watt in 2Q11.
• The Company recorded a non-cash inventory write-down of RMB194.9 million (US$30.6 million) as a result of a lower of cost or market (LCM) assessment and a regular provision for obsolescence.
• Gross loss was RMB155.2 million (US$24.3 million), compared with gross profit of RMB162.9 million in 2Q11 and RMB526.7 million in 3Q10. Gross loss in 3Q11 included the effect of the non-cash inventory write-down of RMB 194.9 million (US$30.6 million).
• Gross margin was negative 10.8%, compared with positive 9.1% in 2Q11, primarily due to a combination of the steep decline in ASP and the significant negative effect of the inventory write-down, which caused a 13.6% decline in gross margin in 3Q11. Gross margin was 24.0% in 3Q10.
• Operating loss was RMB327.8 million (US$51.4 million), compared with an operating loss of RMB25.7 million in 2Q11 and an operating profit of RMB398.7 million in 3Q10. The sequential decrease in operating profit was primarily due to the gross loss and continued investment in sales and marketing.
• Operating margin was negative 22.8% in 3Q11, compared with negative 1.4% in 2Q11 and positive 18.2% in 3Q10.
• Net loss attributable to shareholders on a non-GAAP basis(1) was RMB295.7 million (US$46.4 million), compared with net loss attributable to shareholders on a non-GAAP basis of RMB64.9 million in 2Q11 and net income attributable to shareholders on a non-GAAP basis of RMB273.7 million in 3Q10.
• Net loss per basic ADS on a non-GAAP basis(1) was RMB3.51 (US$0.55), compared with net loss per basic ADS on a non-GAAP basis of RMB0.77 in 2Q11 and net income per basic ADS on a non-GAAP basis of RMB4.62 in 3Q10.
• Net loss attributable to shareholders on a GAAP basis was RMB177.6 million (US$27.9 million), compared with net loss attributable to shareholders on a GAAP basis of RMB69.0 million and RMB25.2 million in 2Q11 and 3Q10, respectively.
• Net loss per basic ADS on a GAAP basis was RMB2.11 (US$0.33), compared with net loss per basic ADS on a GAAP basis of RMB0.82 in 2Q11 and RMB0.43 in 3Q10.
• Annualized Return on Equity ("ROE") on a non-GAAP basis(1) was negative 24.6% in 3Q11, compared with negative 5.2% in 2Q11 and positive 35.3% in 3Q10.
• Annualized ROE on a GAAP basis was negative 13.6% in 3Q11, compared with negative 5.2% in 2Q11 and negative 2.9% in 3Q10.
Mr. Ki-Joon HONG, Chairman and CEO of Hanwha SolarOne, commented, "Overall industry conditions remained quite challenging throughout the third quarter and this is reflected in our most recent results. We did not experience the pick- up in German demand to the extent that we had anticipated and this impacted our ability to expand shipment volumes. Overcapacity, which continues to exist, coupled with soft demand, led to further pricing pressures. We did achieve meaningful reductions in our in-house production costs while we continued to broaden our market globally and make the investments in technology, systems and management that are necessary for our future success. We believe we have also obtained the necessary funding primarily through bank borrowings to support us through this downturn. We believe industry dynamics will remain challenging into early next year, but we will not waver from our long-term commitment to becoming a leading global player.
