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Classified in: Science and technology, Business
Subjects: ERN, CCA

Hanwha Q CELLS Reports Fourth Quarter and Full Year 2017 Results


SEOUL, South Korea, April 11, 2018 /PRNewswire/ -- Hanwha Q CELLS Co., Ltd. ("Hanwha Q CELLS" or the "Company") (NASDAQ: HQCL), a global leading photovoltaic manufacturer of high-performance, high-quality solar modules, today reported its unaudited financial results for the fourth quarter and full year ended December 31, 2017. The Company will host a conference call to discuss the results at 8:00 am Eastern Time (9:00 pm Korea Standard Time) on April 11, 2018.

Fourth Quarter 2017 Highlights

Full Year 2017 Highlights

Mr. Seong Woo Nam, CEO of Hanwha Q CELLS, explained that in 2017, the Company was able to re-establish the course of its strategic direction, focusing more on solidifying its leadership in new markets. He noted that the modules manufactured in the Company's Turkish fab under the JV will be supplied to the Company's 1.3 GW DC solar power plant with a target commercial operation date of 2021 and expressed confidence in the Turkish project's potential to enable the Company to "establish a commanding leadership in the Middle Eastern market through increased brand awareness, proven track record, and locally manufactured products shielded from potential trade disputes."

Mr. Moon Seong Choi, Senior Vice President of Corporate Planning, noted that the Company's "fourth quarter and full year results were in-line with the Company's guidance set forth in Q3 and last year, respectively." Mr. Choi noted that despite the negative impact of Section 201 tariffs in the U.S. solar market, the Company "will continually look for ways to provide high quality solar modules to its customers in the U.S." He added that the Company will focus on expanding its footprint in the U.S. residential segment with its mono-PERC half-cell products as the Section 201 tariffs are expected to have a lesser impact on residential demand.

Mr. Jay Seo, the Company's CFO, noted that the Company's bottom line was negatively affected by the recognition of a one-time loss associated with the discontinuation of its wafer manufacturing operations and bad debt expenses, without which the Company would have seen an improvement in its profitability due to elimination of losses resulting from unprofitable operations as well as a downward trend in wafer prices. Mr. Seo noted that the Company observed a steady downward trend in wafer prices, due to "reduced demand for mono-crystalline wafers after the deadline for Top Runner projects in China, combined with additional mono wafer capacities coming on-line in China."

Fourth Quarter 2017 Results of Operations

Net Revenues

Gross Profit and Margin

Results of Operations and Operating Margin

Net Interest Expense

Foreign Currency Exchange Gain (Loss)

Gain (loss) on Change in Fair Value of Derivative Contracts

Income Tax Expense (Benefit)

Net Income (Loss) and Earnings (Loss) per ADS

Full Year 2017 Results of Operations

Net Revenues

Gross Profit and Margin

Operating Expense, Income and Margin

Net Interest Expense

Foreign Currency Exchange Gain (Loss)

Gain (loss) on change in Fair Value of Derivative Contracts

Income Tax Expense (Benefit)

Net Income (Loss) and Earnings (Loss) per ADS

2017 Year-End Financial Position

As of December 31, 2017, the Company had cash and cash equivalents of $163.5 million, compared with $390.0 million as of December 31, 2016. The restricted cash as of December 31, 2017 was $160.3 million, compared with $116.8 million as of December 31, 2016.

As of December 31, 2017, accounts receivable was $537.6 million, compared with $411.7 million, as of December 31, 2016. Inventories were $317.8 million as of December 31, 2017, compared with $338.5 million as of December 31, 2016.

As of December 31, 2017, accounts payable was $455.5 million, compared with $439.9 million, as of December 31, 2016.

Total short-term bank borrowings (including the current portion of long-term bank borrowings) of $859.3 million represented an increase of $331.4 million from December 31, 2016, due reclassification of long-term borrowings with maturities in 2018 as short-term borrowings.

As of December 31, 2017, the Company had total long-term debt (net of current portion and long-term notes) of $356.6 million, a decrease of $287.1 million from December 31, 2016. The Company's long-term debt is comprised of bank and government borrowings, to be repaid in installments until their maturities, ranging from one to thirteen years.

Capital expenditures were $66.1 million in the full year 2017.

Operations Updates

Production Capacity

As of December 31, 2017, the Company's in-house, annualized production capacities were 1,600 MW for ingots, 4,300 MW for cells and 4,300 MW for modules.

Furthermore, the Company has additional module availability of up to 3,700 MW (annualized) as of December 31, 2017 from Hanwha Q CELLS Korea Corporation, an affiliate of the Company.

Business Outlook

Fourth Quarter and Full Year 2017 Guidance

For the first quarter of 2018, the Company estimates net revenues in the range of $430 to 450 million.

For the full year 2018, the Company provides the following guidance:

Conference Call

The Company will host a conference call to discuss the results at 8:00 am Eastern Time (9:00 pm Korea Standard Time) on April, 11, 2018. The management will discuss the results and take questions following the prepared remarks.

A live webcast of the conference call will be available on the investor relations section of the Company's website at www.hanwha-qcells.com or by clicking the following hyperlink:  https://edge.media-server.com/m6/p/p6fkxxy9.

The dial-in details for the live conference call are as follows:

International Toll Free Dial-In Number

+65 6713-5090

United States

+1 (845)675-0437

South Korea

+82 2-6490-3660

Germany

08001820671

United Kingdom

China, Domestic

Hong Kong

+44 2036214779

4006208038 / 8008190121

+852 30186771

Passcode: HQCL

A replay of the call will be available after the conclusion of the conference call on the investor relations section of the Company's website at www.hanwha-qcells.com and also by dialing the numbers below:

International Toll Free Dial-In Number

+61 2 8199 0299

United States

+1 (855) 452-5696

South Korea

00798-6136-1602

Germany

United Kingdom

08001802149

08082340072

China, Domestic

Hong Kong

8008700206 / 4006322162

800963117

Conference ID: 6998149

Replay time period: April 11, 2018 11:00 ET - April 19, 2018 09:59 ET

About Hanwha Q CELLS

Hanwha Q CELLS Co., Ltd. (NASDAQ:HQCL) is one of the world´s largest and most recognized photovoltaic manufacturers for its high-performance, high-quality solar cells and modules. It is headquartered in Seoul, South Korea (Global Executive HQ) and Thalheim, Germany (Technology & Innovation HQ) with its diverse international manufacturing facilities in Malaysia and China. Hanwha Q CELLS offers the full spectrum of photovoltaic products, applications and solutions, from modules to kits to systems to large-scale solar power plants. Through its growing global business network spanning Europe, North America, Asia, South America, Africa and the Middle East, the company provides excellent services and long-term partnerships to its customers in the utility, commercial, governmental and residential markets. Hanwha Q CELLS is a flagship company of Hanwha Group, a FORTUNE Global 500 firm and a Top 10 business enterprise in South Korea. For more information, visit: http://www.hanwha-qcells.com.

Safe Harbor Statement

This report contains forward-looking statements that are not statements of historical fact. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Such statements, particularly statements about our guidance for performance in the first quarter and the full year 2018, involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include pending administrative and civil actions in the United States under existing or potential new statutes and regulations governing trade between the United States and other countries, and potential antidumping, countervailing or other duties imposed on goods imported into the United States, as well as the Company's access to new capacity from an affiliate. Further information regarding these and other risks is included in Hanwha Q CELLS' filings with the Securities and Exchange Commission, including its annual report on Form 20-F. Except as required by law, Hanwha Q CELLS does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Hanwha Q CELLS Co., Ltd.

Unaudited Condensed Consolidated Balance Sheets

(in millions of US dollars, except share data)














December 31,
2017


December 31,
2016


ASSETS


(unaudited)


(audited)


Current assets







Cash and cash equivalents


163.5


390.0



Restricted cash


160.3


116.8



Accounts and notes receivable - net


377.6


328.1



Receivables from related parties


160.0


83.6



Inventories


317.8


338.5



Loans to related parties


-


13.0



Other current assets


152.0


81.5




Total current assets


1,331.2


1,351.5











Fixed assets - net


778.1


755.5



Intangible assets - net


20.1


16.6



Land use rights - net


49.0


47.9



Deferred tax assets - net


9.1


6.1



Loans to related parties


3.2


6.6



Other long-term assets


77.1


24.9




Total assets


2,267.8


2,209.1


LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities







Accounts payable


186.4


171.1



Notes payable


76.3


107.2



Payables to related parties


192.8


161.6



Deferred revenue


2.0


18.9



Accrued expenses


31.2


36.6



Other payables


22.6


20.2



Tax payables


8.9


16.0



Short-term debt


445.2


377.4



Current portion of long-term debt


414.1


150.5



Customer deposits


10.7


17.3



Derivative contracts


0.4


1.0



Litigation accruals


0.2


1.8



Deferred tax liabilities


-


2.4



Warranty provision


32.9


42.2



Other current liabilities


2.0


6.1




Total current liabilities


1,425.7


1,130.3











Long-term debt


356.6


643.7



Long-term warranty provision


17.5


19.0



Deferred tax liabilities


8.2


7.9




Total liabilities


1,808.0


1,800.9


Stockholders' equity







Ordinary shares


0.4


0.4



Additional paid-in capital


432.2


431.7



Accumulated income 


98.1


107.3



Accumulated other comprehensive loss

(70.9)


(131.2)




Total stockholders' equity


459.8


408.2




Total liabilities, redeemable ordinary shares and stockholders' equity

2,267.8


2,209.1


 

Hanwha Q CELLS Co., Ltd.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in millions of US dollars, except share data and net income (loss) per share)




















For the three months ended 


For the twelve months ended 





 December 31,
2017 


 September 30,
2017 


 June 30,
2017 


 March 31,
2017 


 December 31,
2017 


December 31,
2016





 (unaudited) 


 (unaudited) 


 (unaudited) 


 (unaudited) 


 (unaudited) 


 (audited) 

Net sales


624.7


543.0


577.7


432.0


2,177.4


2,425.9

Cost of goods sold

571.3


479.8


510.5


372.2


1,933.8


1,985.6


Gross profit

53.4


63.2


67.2


59.8


243.6


440.3

Selling and marketing expenses

31.1


30.6


29.5


21.9


113.1


120.1

General and administrative expenses

46.5


17.4


13.5


18.2


95.6


78.2

Research and development expenses

6.5


4.6


4.1


8.8


24.0


49.2

Restructuring charges

-


-


-


-


-


0.7

Other operating expenses (income)

(1.0)


-


-


(17.4)


(18.4)


-


Income from operations

(29.7)


10.6


20.1


28.3


29.3


192.1

Other income (expenses)













Interest income

(0.2)


1.0


2.1


1.0


3.9


8.1


Interest expense

(12.1)


(11.0)


(11.3)


(10.5)


(44.9)


(54.5)


Foreign exchange gain (loss)

(0.7)


7.3


7.1


2.5


16.2


(3.5)


Gain (loss) on change in fair value of derivative contracts 

0.7


(0.6)


(3.0)


(0.4)


(3.3)


(24.4)


Investment income (loss)

(2.2)


(0.4)


0.9


1.2


(0.5)


(0.9)


Other income (expense) - net

(1.4)


0.6


(0.2)


0.9


(0.1)


6.3


Other expense, net

(15.9)


(3.1)


(4.4)


(5.3)


(28.7)


(68.9)


     Income (loss) before income tax

(45.6)


7.5


15.7


23.0


0.6


123.2
















Income tax expense (benefit)

4.9


2.5


(3.0)


5.4


9.8


(4.3)


     Net income (loss) 

(50.5)


5.0


18.7


17.6


(9.2)


127.5
















Net income attributable to Hanwha Q CELLS Co., Ltd.'s stockholders per share:









Basic



(US$0.01)


US$0.00


US$0.00


US$0.00


(US$0.00)


US$0.04

Diluted


(US$0.01)


US$0.00


US$0.00


US$0.00


(US$0.00)


US$0.04
















Net income attributable to Hanwha Q CELLS Co., Ltd.'s stockholders per ADS:









Basic



(US$0.61)


US$0.06


US$0.22


US$0.21


(US$0.11)


US$1.75

Diluted


(US$0.61)


US$0.06


US$0.22


US$0.21


(US$0.11)


US$1.75
















Number of shares used in computation of net income per share:











Basic



4,162,556,067


4,158,769,098


4,158,769,098


4,158,769,098


4,159,715,840


4,159,061,169

Diluted


4,162,556,067


4,158,769,098


4,158,769,098


4,158,769,098


4,159,715,840


4,159,521,554
















Number of shares used in computation of net income per ADS:











Basic



83,251,121


83,175,382


83,175,382


83,175,382


83,194,317


83,181,223

Diluted


83,251,121


83,175,382


83,175,382


83,175,382


83,194,317


83,190,431
















Other comprehensive income (loss)













Foreign currency translation adjustment

9.0


12.0


16.4


22.9


60.4


(60.1)


Pension adjustments

-


-


-


-


-


-

Comprehensive income 

(41.5)


17.0


35.1


40.5


51.2


67.4

 

SOURCE Hanwha Q CELLS Co., Ltd.


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