Hanwha Solutions Corp (XKRX:009830) Q4 2024 Earnings Call Highlights: Revenue Surge Amidst ...

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Fri, Feb 7, 2025, 12:01 AM 4 min read

Q4 2024 Revenue: KRW4,642.9 trillion, a 69% increase Q-on-Q.
Q4 2024 Operating Profit: KRW107 billion, turning profitable Q-on-Q.
Q4 2024 Pretax Profit: Negative KRW276.6 billion.
Q4 2024 Net Profit: Negative KRW124.4 billion.
2024 Annual Revenue: KRW12,294 trillion, down 5% year-on-year.
2024 Annual Operating Profit: Negative KRW300.2 billion.
2024 Annual Pretax Profit: Negative KRW1,242.4 trillion.
2024 Annual Net Profit: Negative KRW1,289 trillion.
Total Assets (End of 2024): KRW29,438.3 trillion, up KRW6,027.9 trillion year-on-year.
Cash and Cash Equivalents (End of 2024): KRW2,242 trillion, increased by KRW160 billion year-on-year.
Total Liabilities (End of 2024): KRW19,168 trillion, up KRW4,853.4 trillion year-on-year.
Borrowings (End of 2024): KRW12,588 trillion, increased by KRW3,238 trillion.
Net Borrowings (End of 2024): KRW10,346 trillion, increased by KRW3,780 trillion.
Debt to Equity Ratio (End of 2024): 187%, up 30 percentage points year-on-year.
Net Debt Ratio (End of 2024): 101%, up 21 percentage points year-on-year.
Renewable Energy Q4 2024 Operating Profit: KRW60.6 billion.
Chemical Segment Q4 2024 Operating Profit: Negative KRW54.2 billion.
Advanced Materials Q4 2024 Operating Profit: Negative KRW2.2 billion.
Equity Method Losses Q4 2024: Negative KRW125 billion.
Dividend Plan for 2024: Greater of 20% of consolidated free cash flow or KRW301 per common share.

Warning! GuruFocus has detected 9 Warning Signs with XKRX:009830.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Hanwha Solutions Corp (XKRX:009830) reported a significant 69% increase in Q4 2024 consolidated revenue, driven by higher sales in the renewable segment and increased revenue from development assets.
The renewable energy segment turned profitable in Q4 2024, recording an operating profit of KRW60.6 billion despite one-time expenses.
Cash and cash equivalents increased by KRW160 billion year-on-year, reaching KRW2,242 trillion by the end of 2024.
The company anticipates steady growth in the development asset sales and EPC segment, with annual revenue for 2025 expected at approximately KRW4 trillion.
Hanwha Solutions Corp plans to distribute dividends based on the greater of 20% of the consolidated free cash flow for 2024 or KRW301 per common share, reflecting a commitment to shareholder returns.

Negative Points

Consolidated operating profit for 2024 turned negative, recording a loss of KRW300.2 billion due to weak solar module prices and challenging market conditions for key chemical products.
Pretax profit and net profit for 2024 were significantly negative, at KRW1,242.4 trillion and KRW1,289 trillion respectively, impacted by one-time expenses and market conditions.
The chemical segment continued to face operating losses in Q4 2024, with a negative operating profit of KRW54.2 billion due to market weakness and increased electricity costs.
The debt to equity ratio of the non-financial sector increased by 30 percentage points year-on-year to 187%, indicating rising financial leverage.
Equity method losses increased in Q4 2024, recording negative KRW125 billion, with continued challenges in the petrochemical market affecting overall performance.

Q & A Highlights

Q: Can you provide a summary of the one-time expenses mentioned during the earnings presentation? A: The one-time expenses in Q4 included KRW60 billion related to restructuring overseas subsidiaries in the renewable segment and KRW96.7 billion from the sale of company housing. Non-operating expenses included KRW150 billion for restructuring and a KRW60 billion impairment loss due to a decline in RAC silicon share price. Overall, these contributed to a KRW300 billion loss in Q4.

Q: What is the current status of US solar module inventories, and when do you expect ASP to rise? A: There is no official data on US module inventories, but it is believed that inventory levels peaked in Q2 last year and have been declining since. While ASPs remain low, the reduction in inventory could lead to a price increase soon.

Q: How has the new US administration affected renewable energy demand, and when will the new US facility ramp up? A: There have been no confirmed policy changes affecting US renewable energy demand. The new wafer and cell facility in the US is expected to be completed by mid-2025, with full ramp-up in the second half of the year.

Q: Could you provide guidance on net debt, CapEx, and free cash flow? A: Net debt decreased slightly to KRW10.4 trillion by the end of Q4. CapEx for 2024 was KRW3.1 trillion, with KRW2.2 trillion for renewables. For 2025, CapEx is expected to be KRW2 trillion. Free cash flow is anticipated to improve post-2025 as CapEx requirements decrease.

Q: What are the expectations for the renewable energy division's revenue and margins in 2025? A: The renewable energy division is expected to generate KRW4 trillion in revenue for 2025. While specific margin guidance is not provided, the company aims to transition from module sales to a total solutions provider, focusing on higher-margin downstream activities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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