Hanwha Solutions reports 70 percent drop in Q3 operating profit

Hanwha Q Cells' solar plant in Georgia. Hanwha Q Cells is Hanwha Solutions' solar panel unit.[HANWHA SOLUTIONS]

Hanwha Solutions, a solar panel supplier, posted weaker-than-expected earnings results for the July-September period, weighed down by a sales decline in renewables and chemicals.

The company saw a 70.81 percent on year drop in operating profit to 98.3 billion won ($72.7 million) in the third quarter. The figure fell far short of the analyst forecast of 121.9 billion won compiled by market tracker FnGuide.

The quarterly operating profit includes tax benefits worth 35 billion won granted under the U.S. Inflation Reduction Act (IRA) subsidy program, according to Hanwha Solutions.

Revenue declined 9.69 percent from the same period last year to 2.93 trillion won, and also missed the expectation of 3.5 trillion won. Net profit plunged 85.1 percent to 20.6 billion won.

Of the 98.3-billion-won operating profit, the renewables business took 34.7 billion won, or 35.3 percent. The figure fell 82.4 percent from the same period last year due to both a sales decline and a cost hike for solar modules. Revenue slipped 3.9 percent during the same period to 1.28 trillion won.

“While the global solar power demand has been rising through the year, some regions, such as Europe, have seen a decline in solar module prices due to supply outrunning demand,” said Hanwha Solutions Chief Financial Officer (CFO) Yoon An-sik during a conference call on Tuesday.

“However, we expect the operating profit to rebound in the fourth quarter, as the impact of higher raw material prices is expected to wear off and sales will bounce back,” said Yoon.

The company is expecting about a 20 percent increase in solar module sales during the fourth quarter compared to the previous quarter. This year’s total solar sales volume is estimated in the lower 8-gigawatt range, which is an adjustment from the initial guideline of 8 gigawatts in the low mid-range.

Hanwha also expects to rack up a revenue of 1 trillion won from energy asset development and engineering, procurement and construction projects in the fourth quarter.

The chemical business saw a 56.3 percent on year decline in operating profit to 55.9 billion won, due to a continued demand slump in the sector. Revenue dropped 12.3 percent to 1.29 trillion won.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]