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China sales fail to help SolarOne

Hanwha SolarOne failed to claw its way back to profitability in the second quarter, as low-margin module sales in China began to edge out higher-margin markets like the UK in the company’s sales mix.

SolarOne, which is based in China but controlled by Korea’s Hanwha Chemical, is attempting to climb into the module industry’s highest tier, with plans to add 500MW of capacity during the second half of the year – bringing its total to 2GW.

Yet compared to larger tier-one rivals, the company remains heavily dependent on a single market – Japan – and engages in a significant amount of module processing for other module suppliers.

SolarOne’s relative lack of geographic diversification bit into its second-quarter results, with modest sales gains in markets like the US and Korea failing to make up for a more than halving of sales to the UK.

Fully 53% of SolarOne’s module revenues came from Japan during the quarter, up from 51% during the last quarter.

By comparison, the single largest market for Trina Solar during the last quarter – the US – accounted for 38% of module shipments, while the largest market for Yingli – China – accounted for 33% of shipments.

SolarOne saw a “meaningful rebound” in sales within China during the quarter, which contributed to the fall in its average selling price to $0.67/W -- from $0.69/W in the first quarter -- and a declining gross margin.

SolarOne swallowed a net quarterly loss equivalent to $8.8m, making it one of a few tier-one module suppliers – Yingli included – that have not yet returned to profitability.

Gross margin fell to 9.5% from 13.9% last quarter.

“Our gross margins were driven down by a lower average selling price, reflecting a decreasing proportion of sales from the higher-priced EU market – particularly the UK – and an increasing proportion from the relatively lower priced China market,” explains chief executive Seong-woo Nam, a Samsung veteran who took the helm at SolarOne this spring.

SolarOne held to its full-year module shipment guidance of 1.5-1.6GW – implying a significant sales jump through the second half of the year, having shipped just 663.1MW through the first half.

Hanwha Chemical also owns Q CELLS, the Germany-based PV manufacturer, and is a significant investor in US solar financier OneRoof Energy.

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