Hanwha Solutions bets on solar power business

Hanwha Solutions’ solar business is on track to become a major cash cow for the company within the next few years.

“The company aims to create 21 trillion won in revenue by 2025 with an operating profit of 2.3 trillion won, which we stated before for our medium-term goal,” Hanwha Solutions told investors upon announcing its first-quarter earnings results, Tuesday. “Among the total sales, Q Cells division will take up 60 percent and Chemical is expected to account for 30 percent of the pie.”

The company expects its solar business to report an operating profit of some 190 billion won this year, which is around how much it achieved last year. “The wafer price will be high through the second quarter but our power generation business is expected to make up for it through better performance,” the company added.

Hanwha Solutions’ operating profit for the first three months of this year was 254.6 billion won, a rise of 52.31 percent, year-on-year. Sales rose 6.94 percent to 2.4 trillion won, while net income reached 385.2 billion won, surging 501 percent during the same period, it said in a regulatory filing to the Korea Exchange.

During the call, it mentioned plans to sell two or three power-generation projects to unspecified customers in the second quarter of this year, at the earliest possible date. “If the sale process is completed as scheduled, then that would help us increase profits,” it said.

The outcome was mainly attributable to strong profitability in the chemical business and the liquidation of some Galleria department store buildings.

The chemical division’s revenue was the largest contributor to the strong quarterly earnings, with sales surging 50 percent to 1.2 trillion won and operating profit tripling to 255 billion won.

“The chemical division is expected to extend its profit streak in the second quarter,” Hanwha Solutions said. “Despite an increase in logistics and raw materials costs, the Q Cells division might see improvements in profitability when its photovoltaic module sales increase and solar power plants are sold as scheduled.”

The strong figures were backed by lower raw material costs and higher chemical product demand for construction components, hygiene products and packing materials. Hanwha Q Cells’ revenue dropped 18 percent to 745 billion won with an operating loss of 15 billion won due to cost increases for raw materials and logistics.

“Since the second half of last year, the supply and demand of polysilicon was tight, increasing wafer prices that impacted our profitability,” the company said. “Also due to COVID-19, logistics costs surged along with the Suez Canal accident that was an additional cost burden,” it told investors.

However, the company says the high material costs are predicted to peak in May and stabilize throughout the second half of this year.