Turning Around
Korean photovoltaic power companies showed a significant performance improvement in the first quarter of this year.
Hanwha Chemical recorded 83 billion won (US$81.3 million) in operating profits during the period. The successful turnaround can be attributed to its photovoltaic business unit, which posted 24.1 billion won (US$23.6 million) in profits. The division’s losses had amounted to 27.6 billion won (US$27 million) in Q1, 2013.
Hanwha Q Cells, another solar power subsidiary of the Hanwha Group, is succeeding in cost reduction and demand expansion, too. This year, the Hanwha Group’s photovoltaic business is showing a remarkable performance in the downstream segment, which is considered to be more profitable. Hanwha Q Cells is faring particularly well in European countries like Britain, France, and Denmark.
OCI is following the same course as well. 14 billion won (US$13.7 million) out of its 27.86 billion won (US$27.3 million) in operating profits for Q1 was earned by the Basic Chemical Division engaged in the polysilicon business. The company posted 40 billion won (US$39 million) in losses during the same period last year.
The recent rise in the average price of polysilicon, which is in use as a photovoltaic material, is helping out OCI. According to market research firm PV Insight, the price rose from approximately US$15.00 to US$21.50 per kilogram between early January and mid-May.
Woongjin Holdings also made a turnaround in the same quarter with business profits of 3.53 billion won (US$3.46 million). Woongjin Energy, its subsidiary doing the solar power business, succeeded in cutting most of its losses. Woongjin Energy announced on May 15 that its business losses dropped to 3.193 billion won (US$3.126 million) from 11.736 billion won (US$11.490 million) between the first quarters of 2013 and 2014.
Photovoltaic firms smaller in size than the market leaders are doing well, too. For instance, Shinsung Solar Energy boosted its sales by as much as 178 percent year-on-year to 45.9 billion won (US$44.9 million) in Q1, posting profits from the 6.2 billion won (US$6.1 million) losses of Q1 last year. S Energy increased its sales and profits by 62.4 percent and 144.6 percent to 64.212 billion won (US$62.864 million) and 3.091 billion won (US$3.026 million), respectively.
These mid-sized firms are distinguishing themselves in overseas markets in particular. “The quarterly photovoltaic module sales volume is estimated at approximately 60 MW, and the combined capacity of new solar power generation projects reached 5 MW in Korea and 8 MW in Malaysia, Japan and the like,” said Choi Ji-hwan, analyst at NH Nonghyup Securities.
In Japan, Shinsung Solar Energy has won new orders worth a total of over 135 billion won (US$132 million) in 2014 alone. The company set up its overseas office in Japan two years ago.
The outlook of the photovoltaic market as a whole is very bright, too. The polysilicon price has been stabilized and restructuring is underway in China for a supply and demand balance. “The Chinese government has shown its strong will for the restructuring since the first half of 2013, posing a restriction on facility expansion and production increase,” Samsung Securities analyst Kim Seung-woo explained, continuing, “69 percent of the solar power companies in China are subject to restructuring.”