Hanwha SolarOne Reports First Quarter 2012 Results

Hanwha SolarOne Co., Ltd. ("SolarOne" or the "Company") (Nasdaq: HSOL), a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic ("PV") cells and modules in China, today reported its unaudited financial results for the quarter ended March 31, 2012. The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) on May 30, 2012. A slide presentation with details of the results will also be available on the Company's website prior to the call.

FIRST QUARTER 2012 HIGHLIGHTS

• Total net revenues were RMB803.9 million (US$127.7 million), a decrease of 17.8% from 4Q11, and a decrease of 63.5% from 1Q11.
• PV module shipments, including module processing services, were 160.7 MW, a decrease of 15.0% from 189.1 MW in 4Q11, and a decrease of 35.3% from 248.5 MW in 1Q11.
• Average selling price ("ASP"), excluding module processing services, decreased to RMB5.30 per watt (US$0.84) from RMB6.29 per watt in 4Q11, and decreased from RMB11.23 per watt in 1Q11.
• Gross loss decreased by 87.6% to RMB75.2 million (US$11.9 million), from a gross loss of RMB604.6 million in 4Q11. Gross profit was RMB380.0 million in 1Q11.
• Gross margin was negative 9.4%, compared with negative 61.8% in 4Q11, primarily because the decline in production costs outpaced the decline in ASP.
• Gross margin in 1Q11 was positive 17.2%.
• Operating loss decreased by 78.0% to RMB220.9 million (US$35.1 million) from an operating loss of RMB1,005.2 million in 4Q11. The Company recorded an operating profit of RMB262.2 million in 1Q11. The decrease in operating loss in 1Q12 from 4Q11 was primarily due to the decline in gross loss, tight control of operating expenses, in particular selling and marketing expenses and general and administrative expenses. l Operating margin was negative 27.5%, compared with negative 102.8% in 4Q11 and positive 11.9% in 1Q11.
• Net loss attributable to shareholders on a non-GAAP basis was RMB269.9 million (US$42.9 million), compared with a net loss of RMB862.3 million in 4Q11 and net income of RMB154.4 million in 1Q11.
• Net loss per basic ADS on a non-GAAP basis was RMB3.20 (US$0.51), compared with a net loss per basic ADS of RMB10.22 in 4Q11 and net income per basic ADS on a non-GAAP basis of RMB1.84 in 1Q11.
• Net loss attributable to shareholders on a GAAP basis was RMB303.7 million (US$48.2 million), compared with a net loss attributable to shareholders on a GAAP basis of RMB832.9 million in 4Q11. The Company recorded a non-cash loss of RMB9.5 million (US$1.5 million) from the change in fair value of the convertible feature of the Company's convertible bonds as compared with a non-cash gain of RMB33.2 million in 4Q11. Net income attributable to shareholders on a GAAP basis in 1Q11 was RMB149.4 million, including a non-cash gain of RMB47.9 million from the change in fair value of the convertible feature of the Company's convertible bonds. As explained in prior quarters, the fluctuations in the fair value of the convertible feature of the Company's convertible bonds are primarily due to changes in the Company's ADS price, over which the Company has no direct control, and does not reflect the operating performance of the Company. The Company also recorded a RMB56.1 million (US$8.9 million) loss on the extinguishment of debt related to its repurchase of convertible bonds. l Net loss per basic ADS on a GAAP basis was RMB3.60 (US$0.57), compared with a net loss per basic ADS on a GAAP basis of RMB9.88 in 4Q11 and net income per basic ADS on a GAAP basis of RMB1.78 in 1Q11.
• Annualized Return on Equity ("ROE") on a non-GAAP basis was negative 29.4% in 1Q12, compared with negative 81.5% in 4Q11 and positive 12.6% in 1Q11.
• Annualized ROE on a GAAP basis was negative 29.2% in 1Q12, compared with negative 70.6% in 4Q11 and positive 11.3% in 1Q11.

Mr. Ki-Joon HONG, Chairman and CEO of Hanwha SolarOne commented, "Our first quarter results reflect our decision to reduce shipments to the U.S. in order to avoid any potential retroactive tariffs. This strategy now appears prudent as the U.S. Department of Commerce recently decided to retroactively enforce new countervailing duty and anti-dumping tariffs. The industry still faces some challenges, but we are encouraged by certain areas of progress for the Company. We have increased utilization of our cell and module capacities, reflecting a significant improvement in demand. We are pleased with the cost reductions we have achieved so far, and we expect to see further cost reductions in the coming quarters. We have been able to maintain tight control over our operating expenses while still investing in people, product quality, branding, technology and management systems. We are also making progress in our downstream initiatives. The $180 million loan facility we obtained in April 2012 provides us with the necessary capital to grow our business. The holding company of our largest shareholder, Hanwha Chemical Corporation, guaranteed the loan facility, demonstrating its continued and strong commitment to our company. We believe the next quarter will show the progress we have made as we start to see higher volumes, continued reductions in processing costs and a return to positive gross margins."

FIRST QUARTER 2012 RESULTS

• Total net revenues were RMB803.9 million (US$127.7 million), a decrease of 17.8% from RMB978.3 million in 4Q11, and a decrease of 63.5% from RMB2,203.1 million in 1Q11. The decrease in total net revenues in 1Q12 compared with 4Q11 was primarily due to lower shipments and reduced ASP.
• Revenue contribution from PV module processing services as a percentage of total net revenues was 7.7%, compared with 8.9% in 4Q11. This reflected a decrease in revenue from Q-Cells, which filed a petition for bankruptcy in April 2012, and the Company's efforts in building its own brand.
• PV module shipments, including module processing services, were 160.7 MW, a decrease from 189.1 MW in 4Q11, and a decrease from 248.5 MW in 1Q11. The decrease in module shipments in 1Q12 was primarily due to our decision to reduce shipments to the U.S. to avoid potential retroactive tariffs.
• The Company saw robust demand from Germany prior to the pending feed-in-tariff reductions. Germany accounted for 43% of total shipments, an increase from 23% in 4Q11. Shipments to the U.S. were curtailed in order to avoid potential retroactive tariffs as a result of the U.S. Department of Commerce countervailing duty and anti-dumping investigations. The U.S. accounted for 5% of total shipments, a decrease from 33% in 4Q11. Demand fom India remained robust at 13% of total shipments, followed by Australia and Italy at 5% each. Some new markets in Eastern Europe (Bulgaria and Slovenia) in aggregate accounted for 4% of total shipments. Demand from China was light in 1Q12, but is expected to see renewed momentum in 2H12.

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