Good afternoon. I am Shin Yong-In, CFO of Hanwha Solutions. Thank you for joining the call today. I will brief you on the business performance, financials, and 2023 Q1 outlook by segment. Q4 2022 performance. Please refer to page nine of the presentation. The consolidated sales of the Q4 2022 increased by 16.7% QoQ to KRW 3,928.8 billion. Despite the decline in global price of key chemical products, this is due to increase in revenue as the renewable division started to see some profit realized from the power generation business. Despite profit from the power generation business, the operating profit declined by 47.7% QoQ to KRW 182.2 billion due to narrowing spread of key chemical products.
Earnings before income tax and net income are negative KRW 105.3 billion and KRW 108.2 billion, respectively, taking a negative turn from the previous quarter. This is due to one-time expense reflected in the non-operating income category. One-time expense reflected in Q4 2022 is slightly over KRW 100 billion, which includes about KRW 50 billion in asset impairment loss from asset rationalization of the advanced materials and KRW 26 billion in derivatives valuation loss. Please refer to the bottom half of page nine for performance by segment. 2022 annual performance. Please turn to page 10 of the presentation. For FY 2022, the consolidated sales is KRW 13,663.9 billion, which is 27.3% growth year-on-year.
This is thanks to the general growth of sales of all business segments, especially the growing global solar panel installation demand drove sales volume of renewable divisions and profit realized from the power generation development project. Despite smaller operating profit than that of the last year due to the worsening profitability of the key chemical products, the turnaround of the renewables drove the operating profit higher by 30.9% YoY to KRW 966.2 billion. On financials. Please turn to page 11. As of the end of 2022, total asset grew by KRW 3,824 billion - KRW 23,831.7 billion. Cash and cash equivalent grew by KRW 877.4 billion - KRW 2,731 billion.
Total liabilities increased by KRW 2,365.9 billion – KRW 14,172 billion . Total debt grew by KRW 1,333 billion – KRW 7,208 billion . Net debt grew by KRW 456 billion from the end of last year to KRW 4,476 billion . Total liabilities to equity ratio increased by three percentage point to a hundred and forty-seven percent. Net debt to equity ratio declined by three percentage point to forty-six percent. Next, performance by segment. First, renewable energy. Q-four operating profit of renewable grew eighteen percent QoQ to KRW 231.9 billion , thanks to the higher sales volume and the sales of the power generation product in the U.S. and Europe, despite minor decline in module ASP and performance bonus.
During Q1, despite the seasonality, the renewable energy will remain solid profit or maintain solid profit as one-time expense from the previous quarter no longer affects the business. On chemicals. Due to narrowing spread of PVC, PE, and other key products and one-time expense of performance bonus, the Q4 operating profit of chemicals turned negative, recording negative KRW 32.1 billion. In Q1, due to base effect of one-time expense and expected recovery of spread of overall chemical products, we expect the segment to turn around. Advanced materials. During Q4, due to the inventory adjustment by customers and one-time expenses, the operating profit turned negative to record negative KRW 4.1 billion. In Q1, thanks to base effect of one-time expense of the previous quarter, it is expected to turn around. On Galleria.
Boosted by improving seasonal index, sales from Galleria division increased in Q4, and operating profit grew by 121% to KRW 17 billion. Due to the worsening seasonal index in Q1, both sales and operating profit are expected to decline. FYI, Galleria division will be spun off to a newly established company called Hanwha Galleria from March 1. Therefore, this will be the last quarter where the full quarterly performance of Galleria division is included in the consolidated operating profit. For Q1 2023, the performance of January and February only will be reflected as discontinued operations net income. Next, equity method gains.
Due to narrowing product spread of equity method companies, the equity method gain recorded negative KRW 80.1 billion and the loss continued. During Q1, as China changed its COVID response policy and the demand for the key products recovered after the Lunar New Year holidays, the size of the equity method loss is expected to be smaller. On this year's dividend plan, based upon the company's mid long-term shareholder return policy. Please turn to page 26. In February last year, the company announced its mid long-term shareholder return policy, saying that 20% of consolidated free cash flow for the next five years will return to our shareholders. In 2022, the company continued its investment into growth industries such as solar panel, therefore the consolidated free cash flow recorded negative amounts.
Considering the cash influx from the partial equity sales of Ningbo entity and advanced material as a total consolidated free cash flow is in negative figures, there is no resource for shareholder return. When the company's continued investment into the growth areas start to bear fruit in the form of sustainable corporate value enhancement and cash flow generation sufficient for dividend, the company will execute the shareholder returns such as cash dividend and purchase of treasury stock. This concludes the IR briefing. Thank you.
Now Q&A session will begin. Please press star one. That is star and one if you have any questions. Questions will be taken according to the order you've pressed the number star one. For cancellation, please press star two, that is star and two on your phone. The first question will be provided by Nikhil Bhandari from Goldman Sachs. Please go ahead with your question.
Yes. Hi. Thank you so much for the opportunity. I had three questions, if I can ask. The first is, can you elaborate more on the solar business guidance for 2023, in terms of heading into 1Q? You mentioned it's a low season, but is any sense you can give us on the QoQ or YoY range of growth? Also similarly for the operating profit margin, do you expect 2023 to be a low to mid-teens OPM business for solar or high single digits? Any more color you can give on the solar guidance that'll be helpful, both on the revenue level and OPM.
Second is, for the U.S. plant, ingot to module plant that was announced. Can you talk about your strategy for or your plans on the wafer technology? What technology are we going to be using? I'm asking in particular because there has been news flow around what if China control the export of wafer technology, how do we think about creating or building our own wafer in the U.S.? What technology are we using? If you can give some clarity on that'll be helpful. Third is, any thoughts around a potential Europe IRA as well or IRA style act to come as well and how would that how could that help Hanwha Solutions for their business development in the European market? Thank you.
Regarding your first question, as you might be aware that we do not actually provide any actual guidance with any definite figures for the total year or a quarter, but we can share the overall direction, as we are in the process of reinventing our business model from the sales of the solar modules into the comprehensive power generation business, which includes the development, sales and EPC. We are in the process of actually expanding our business area. What we can expect, by this business transition is that the sales and operating profit from not just the module but, from this newly, expanded business area is something that we can expect. Same is true for the OPM.
We don't have any annual guidance for the OPM, but as this business structure evolution continues on it, the mid to long-term basis, that what we can share for the mid to long-term basis, the keyword here is a sustainable figure, is that we are shooting for the mid to high single-digit OPM sustainably. That means that on a quarterly or sometimes hopefully on an annual basis that we can shoot for even higher performance than the mid to high single-digit, as was the case for the fourth quarter of last year. This is what is looks to be the case for the first quarter of this year, is that we are demonstrating low to mid-teens.
What we are hoping to maintain on the mid to long-term basis is the mid to high single-digit. If the business transformation continues on as we have expected that we could hope for the low teens. To respond to the expected performance for the first quarter of this year, I'd like to elaborate on the performance of the fourth quarter of this year for the renewable energy. We have recorded the sales of KRW 2.82 trillion in sales and operating profit is KRW 231 billion. That actually we have to take that with a caveat that we have paid out the performance bonus of KRW 40 billion.
The operating profit without those one expense item will be about KRW 270 billion. As you can see on page 12, in this quarter, meaning the fourth quarter of 2022, there was some profit realized in the power generation business. The contribution from those projects or the sales was KRW 550 billion in revenue, and KRW 70 billion in operating profit.
[foreign language] 조금 더 구체적으로 이제 판매량이라든가 이런 부분을 좀 말씀을 드리면 일단 Q4는 Q3 대비해서 보시다시피 발전수익의 매출 기여를 제거하더라도 수익이 약 10% 내외로 성장을 했습니다. 매출이 성장을 했습니다. 마찬가지로 올해 Q1 Q4는 그래서 이제 매출이 증가했다는 얘기는 결국 판매량이 주로 증가한 부분에 기인한다는 해석이 되고요. Q1은 약간의 비수기 영향이 조금 더 Q4보다 크게 작용을 할 예정이기 때문에 판매량 자체는 좀 감소할 것으로 보고 있습니다.
[foreign language] 그래서 일분기에도 발전 사업을 고려하고 선가급도 들어가, 선가급 소멸 효과도 있지만 전체적으로 절대적인 숫자가 사분기와 유사한 수준으로 수정하는 이유입니다.
With that reflected, meaning the KRW 70 billion coming from the sales of the power generation facility in the fourth quarter. That means that during the fourth quarter, the net profit from the rest of the business will be about KRW 200 billion. Based upon that, let me try to give you the guidance for the first quarter of 2023. We believe that the solid profit will be maintained in the range of KRW 230 billion. Of course, there is a potential for additional upside coming from the power generation business.
We can also, and also we can expect some base effect of the KRW 40 billion that has been paid out in the fourth quarter of 2022 as a performance bonus. Because of those reasons, we expect the profit range will be in the same as that of the fourth quarter. Just additional one additional piece of information about the revenue and the sales volume. In the fourth quarter of 2022 versus the previous quarter, the sales increased by 10% on QoQ. That means that the sales volume increased likewise. As was said during the presentation, the first quarter is traditionally a low season, we expect a slight decline in the sales volume.
Thanks to the expected incremental from the power generation and the base effect of the one of fixed assets, the overall profit range will be maintained in the same range as that of the fourth quarter.
[foreign language] 그리고 두 번째 질문 주신 이제 웨이퍼 기술 관련된 부분은 사실 저희가 아직 인재 착공 준비를 시작을 하고 있는 상황이고 어 굉장히 민감한 사안으로 어 생각이 됩니다. 이게 정치적인 부분이어서가 아니라 어떤 기술 관련된 얘기이기 때문에 어느 공정이든 조금 저희가 오피셜하게 오픈을 드리기는 조금 어려운 부분을 양해 부탁드리겠습니다. 그래서 저희가 알고 있는 사실은 이제 저희도 어 미디어를 통해서 관련 내용에 대해 검토 중이라는 부분을 이제 접했고요. 일단 저희의 프로젝트는 어 최대한 이런 이슈에 상관없이 차질이 없도록 저희가 준비하는 데 만전을 기하고 있습니다.
Regarding your second question about the wafer technology.
It is too early for us to disclose anything that is tangible because now we are preparing for the groundbreaking of the facility, the plant in the United States. The technology is a rather sensitive topic. It is not necessarily because it has a political implication, but it is the technology itself. It is our policy to not disclose officially as to our choice of technology until it's tangible. What we can share at this moment is that we are keeping an eye on the media report as you do. We are, we will make sure that our project will pan out as we have planned without any interruption.
[foreign language] 그리고 유럽 관련된 이제 IRA 유사한 어떤 정책이나 이런 부분들에 대해서는 아직 시장의 컬러가 그렇게 좀 구체적으로 나오지 않은 상태로 파악하고 있습니다. 저희도 일단은 뭐 지켜보고 있는 상황이고요. 만약에 그 이런 어떤 정치적인 정책적인 부분이 굉장히 중요하긴 하지만 그런 부분을 제외하더라도 저희가 포커스하는 마켓에 기회가 있다면은 얼마든지 긍정적으로 활용할 수 있을 것 같고요. 지금은 조금 너무 시기상조라서 저희가 어떤 판단을 하기에는 좀 빠른 경향이 있는 것 같습니다.
About the third question of the EU's or the European version of the IRA. We are still waiting and see how the market is actually interpreting this move as this is to do with the policy or the political landscape of a particular country. This is not something that we can share lightly.
What we can tell you for now is that if there is any positive development happening in the market that we put the strategic importance on, then we will view it positively.
[foreign language] 어떤 그런 정책적인 부분을 꼭 포커스하지 않더라도 아시다시피 작년 같은 경우에 유럽은 굉장히 견조한 수요 성장을 보여주었습니다. 이 부분은 이제 단기적인 그런 부분보다는 전반적으로 중장기적으로 이 에너지 독립에 대한 여러 가지 위기의식과 관심들이 집중된 결과로 생각이 되고요.
Not just focusing on the policy aspect, that we were able to witness a very solid growth of demand in the European market last year. It is not necessarily a short-term phenomenon, but we expect, we view that as something that will stay for the some time because of what has happened in or what is still happening in Europe. There is this growing awareness on the importance of the energy independency or the energy security. This is something that many European countries and regions will focus on. That will actually open up new opportunities for us, not just the sales of the modules, but possibly to the power generation and the system sales.
The following question will be presented by Jae-Sung Yoon from Hana Securities. Please go ahead with your question.
Two questions. In the presentation, you said that in the fourth quarter, the ASP for the solar panel went down slightly. Could you give us the breakdown by the region? Also, what is the current trend of ASP by region for the first quarter? There was also the news that the module that does not include any materials or the processes from Xinjiang are starting to be imported to the United States. Are you aware of this development and will it have an impact on us? That's the first question.
The second question is that with the IRA that we can expect to have some subsidy, with the support from the government and do you have any idea as to what will be the impact of the IRA related support on our books? To respond to the first question, of the solar ASP for the fourth quarter, based upon the market data, we can share what has happened to us. According to market data, there has been a huge amount of fluctuation from the fourth quarter last year and the first quarter this year. It is not just with regard to the module, but more of an upstream. But that might have a different impact on who the player is, in terms of kind of solutions.
The Q4, the fluctuation was not very high for the European and the Korean market. Of course, there was some impact from the low season, seasonality and others. The ASP for those markets went down slightly, but as you are aware that we have a high dependency on the U.S. market. Given this weighted, weighting, on, our sales distribution, and we, disclosed that, our ASP for the fourth quarter went down slightly.
[foreign language] 하지만 저희가 생각했을 때 스프레드 측면, 사실 변동성이라는 게 질문은 ASP를 주셨지만, 원가 측면에서도 같이 존재를 하는 상황이라서 저희가 1분기는 평가의 방향보다는 스프레드 측면에서 내부 추정에 대한 방향을 좀 드리면 저희는 이제 4분기 대비해서 크게 주요한 변수로서 작용하지는 않을 것 같습니다. 방향은 위아래로 다 열려있고, 원가도 마찬가지인 상황입니다. 원가가 굉장히 급격하게 하락을 했다 지금 다시 반등을 하고 있는 상황이기 때문에 이것을 분기로 시기를 좀 늘려서 봤을 때는 smoothing 효과도 좀 있을 것 같고요. 아시다시피 좀 리드 타임도 있습니다, 저희가 판매를 할 때. 그럼 모든 걸 고려했을 때 스프레드 측면에서 1분기가 저희의 실적의 방향을 중요하게 변화시키는 그런 요인으로 작용하지 않는 범위 내에서 전분기 대비해서 큰 변화의 요인은 아니다라고 생각하고 있습니다.
For Q1, first, relying on the short term market data.
There was a huge amount of fluctuation starting from the end of November and February of this year. The level of the variability or the fluctuation was really high for the past couple of months. That means that there is still room for the additional fluctuation or variability. Instead of focusing on the ASP, that it's what you have asked that we would rather focus on the spread because it is not just the ASP that was affected by this variability, but the cost as well. We'd rather focus on the spread. For Q1, the spread looks to be in the same, looks to demonstrate the same pattern as that was the Q4. That means that there is both upside and downside potential for the cost and the ASP.
Looking into, the spread, and, given the period that we are looking at is, a single quarter, so 3 months, that there, is a smoothing effect. Of course from the manufacturing and the sales there is some, kind of lead time. Considering all of those, factors that the spread that we're looking at for the first quarter would not, have major, impact on our overall performance.
[foreign language] 두 번째, 그 신장산 물, 물량들이 신장산을 사용하지 않은 물, 오즈 같은 경우에 미국의 유입이 원활하게 되고 있다라는 그 미디어 기사에 대한 저희의 파악하고 있는 현황을 물어보셨는데요. 사실 아시다시피 이런 정치적인 부분은 저희가 조금 답변을 드리기가 어렵습니다. 저희도 똑같이 이제 미디어를 통해서 파악을 하는 부분을 감안해 본다면 미국의 조금 타이트했던 수급 상황은 올해 다소 완화될 가능성이 있다고 보고 있습니다.
[foreign language] 하지만 또 한편으로 이제 통계 자료 같은 부분을 참고해 보면 작년에도 상당 부분의 물량들이 여전히 이제 국가에서 국가, 어떤 국가에서 특정 국가로의 flow가 아예 없었던 부분은 아니기 때문에 실제 그 영향이 이제 어떻게 될지는 결과적인 값을 저희도 확인을 같이 해봐야 될 것 같습니다. 저희 회사의 영향을 궁금해하신다고 하면 저희는 이런 부분과 좀 별개로 아시다시피 저희가 잘할 수 있는 시장, 국가별로는 이제 뭐 아시다시피 미국과 유럽에 포커스를 하고 있고요. 섹터별로는 저희가 rooftop 시장 쪽에 많이 이제 전략적으로 계속해서 포커스를 하고 있기 때문에 그런 부분의 결과로 이런 부분과 상관없이 저희가 견조한 수익을 달성해 나갈 수 있도록 노력하겠습니다.
Regarding the part two of the first question of the module that does not include any parts or the supplies from the Xinjiang being imported to the United States. It has, it might have some political implications.
I would not share any official position at this moment. We are following the media report as you do. According to the media report that we could predict or expect that the tight supply that has happened in the United States is likely to be eased a little bit this year. Also looking into the statistics, it seems that there hasn't been any interruption of the volume flowing from country A to country B. I don't believe that there is a major change. We are waiting to see as to what that means for the market overall. If you ask me what that will impact us, then slice is that we are focusing on the areas and the markets that we have the strength in.
In terms of the geography that we are focusing on the U.S. and European market and in terms of the sectors that our strategic focus area is rooftop. Given the fact that we will try to maintain the solid profit that we were able to enjoy in the past couple of quarters.
[foreign language] 마지막 IRA 관련된 보조금이 저희 쪽에 어떤 식으로 반영이 될까에 대한 어떤 progress가 있는지 여쭤보셨는데요. 물어보셨는데요. 일단 아직은 결정된 바가 없습니다. 지금 February인데 저희가 아마 한 몇 개월 내로 약간 저희의 해석은 아니고요. 제3회 기관의 해석을 기다리고 있는 상황입니다. 그래서 그게 이제 확정이 되면 영업, 그러니까 그 손익계산서에 반영이 될지 아니면 재무상태표에 반영이 될지를 어느 정도 알 수 있을 것으로 생각이 되고요. 조금 더 기다려 주시면 좋겠습니다.
About your second question, IRA related subsidiary, subsidy and the progress so far is that we don't have anything tangible to share with you as of now. Now it's in February, and we are actually in the process of waiting for a third party interpretation of the potential benefit that we can enjoy or other impact that we might face with. We expect that to come within several months. That will help us to understand better as to the impact will be on our P&L or the balance sheet. Please be patient and as soon as we have anything tangible from the official third party, then we will share.
The following question will be presented by Dongjin Kang from Hyundai Motor Securities. Please go ahead with your question.
Hi. Two questions. First is that with the recent change in California and NEM 3.0, it is suspected that it might have some negative implication on the rooftop installation. Given the NEM 3.0 and IRA and overall market situation, what do you expect the future of the market will be? What will be the impact that you are expecting from this recent policy move? The second question is that in the fourth quarter that there was a major project sales, and can you give us as to the size of the scales of this project that was sold?
For this year, if there is anything planned for this kind of development facility or the project sales or additional upside that we can expect from other business area than the power generation. The first question about the potential impact of the NEM 3.0, so this is something to be expected after the expiration of the NEM 2.0, and the size of other compensation will be much lower than that of the previous version. For our customers, that means that the payback period will be a bit longer than the previous regime. There is a grace period given, so we expect the application for under the NEM 2.0 regime will be higher. Of course there is an installation capacity to think about.
In terms of the demand, we expect the rush to happen for a short term, but in the longer term basis, or depending on how long you are looking at. If you focus on the timing that is transitioning from the NEM 2.0 to NEM 3.0, that there could be some negative impact. What we need to focus on is that the U.S. market overall is a growing market. There has been many different policies that was introduced in the past ten years, and that the amount of subsidy went down quite significantly. After the initial aftershock was absorbed by the market, that the market continued to grow and this is something that we expect to see again in this round.
[foreign language] 예, 다음으로 그 발전 사업 가이던스에 대해서 말씀을 드리겠습니다. 우선 저희가 기존에는 기가와트 단위의 이제 가이던스를 제시해 드린 바가 있었는데 이에 대해서 이제 그 금액적인, 그래서 저희의 실적 추정을 함에 있어서 많은 분들이 좀 어려움을 겪으신 것으로 알고 있습니다. 그래서 금번부터는 저희가 매출액 기준으로 해서 가이던스를, 이 발전 사업에 대해서만 매출액 기준으로 가이던스를 제시해 드리고자 합니다.
The next question about the guidance for the development power generation project. In the past that we have shared in the GW basis. That actually caused a lot of difficulties and confusion for some of you to actually translate that into the implication in monetary terms. Starting from this year that we will provide the guidance for the power generation in a month.
[foreign language] 2023년 연간 저희의 그 프로젝트 매각 계획은 매출액 기준으로 약 KRW 1 trillion을 계획하고 있으며, Q1 예상 매출액은 KRW 100 billion 수준으로 계획을 잡고 있습니다. Q2 및 Q3에 많은 양이 집중이 되어 있는 상황입니다.
The power generation product sales, the revenue wise for the year 2023, the target or the total budget is KRW 1 trillion. For the fourth quarter, we expect to see about KRW 100 billion. The most of the project sale will be concentrated on the second and the third quarter.
[foreign language] 다음으로 질문해 주실 분은 J.P. Morgan의 Parsley Ong님입니다. The following question will be presented by Parsley Ong from J.P. Morgan. Please go ahead with your question.
Hi, thank you for the presentation. I have two questions. The first question is, you mentioned just now you expect near term 10%-15% OP margin for your solar division and mid to long term high single digit or mid to high single digit OP margin. Can I confirm if that's, that refers just to your module sales business and it doesn't include the power plant sales and IRA tax credits? And then the second question is, can you kind of split out the fourth quarter one-off impacts by division on both the operating profit side and non-operating profit side? For example, you have maintenance, impairment, year-end bonus payment, etc. Could you just summarize the details for us on both the operating profit and non-operating side? Thank you.
[foreign language] 네, 두 가지 질문 드리도록 하겠습니다. 그 영업이익률 관련해서 그 솔라 쪽에서 그 재생 에너지 관련해서 말씀해 주신 것이 단기적으로는 한 10%-15%, 그러니까 그 low to mid double digit으로 보고, 그리고 좀 장기적으로 보았을 때는 그 mid to high single digits의 OP 마진을 보는 것으로 이해하면 좋을지요? 이 숫자가 그 모듈 판매에만 포함이 되는 것인지, 아니면은 발전 시설 매각이라든지 아니면 IRA 관련된 보조금 등도 포함한 것인지에 대해서 궁금합니다. 두 번째 질문드리고 싶은 것은요, 그 Q4와 관련해서 일회성 비용이 이것이 어떻게 구분이 되는지, 영업이익 쪽으로 그리고 비영업이익 쪽으로 어떤 식으로 나눠지는지, 유치 보수라든지 아니면 선가 급등이 있을 것인데, 그것이 이제 각각의 세그먼트별로 사업 부문별로 어떻게 나눠지는지에 대해서 간략하게 말씀 부탁드리겠습니다.
[foreign language] 일단 그 10%-15%의 그 수익성 영업이익률 같은 경우는, 지금 저희가 지난 Q4랑 그다음에 올해 Q1에, 해당 수준의 그 OPM을 보였다는 말씀을 드렸던 부분을 정정을 드리고요. 단기적으로 수익성은, 수익성 측면에서 가게 되면 사실 revenue를, 그 매출도 그 가정하기에 따라 달라지기 때문에 저희가 Q1까지는 이제 Q4 수준에 유사한 실적 견조한 절대값 기준입니다. 그렇게 이제 가이던스 드렸다는 부분을 조금 remind 드리고 싶고요.
Regarding the first part of the question, the clarification of the 10%-15% OPM for solar, is that the 10%-15% OPM is what we have achieved in the Q4 and what we are looking to achieve in the Q1 only. That is for the two consecutive quarters and it is not something that we can predict any longer than that.
Because there is a top line, performance that we need to, predict into. Based upon the absolute value of what we have achieved in the fourth quarter, we can predict that this is what we are expecting to see in the first quarter, and that's that.
[foreign language] 이제 모듈만 제조했던 모듈 위주의 사업 구조였을 때는 저희가 중장기적인 어떤 지속 가능한 수익 수준을 mid- to high single-digit OPM 정도로 소통을 계속 드려왔는데 지금 한 2, 3년째 계속하고 있는 사업 구조의 고도화라든가 사업 영역의 확대 이런 부분을 통해서 이제 중장기적으로 지속 가능한 수준 자체가 이제 mid-high to teens 까지 기대를 해볼 수 있는 정도로 저희가 이제 target에서 넘어가는 그런 과정에 있다고 이해를 하시는 게 더 좋을 것 같습니다.
It has been our consistent communication, that, for the module when we were focused on the module only, business model sales, business, the mid to long term basis, the sustainableThe OP margin target that we are shooting for is the mid to high single digit. As we have shared with you multiple times in the past couple of years, we focused on the sophistication of the business model and expansion of the business area that we can actually provide you with additional upside, that now we might be able to shoot for the early teens.
Um,
Regarding the one-off expense for the fourth quarter. The operating side is mostly the performance bonus and the corporate wide, the enterprise-wide, there was about KRW 100 billion.
For non-operating side, one-off expense was slightly over KRW 100 billion. They include the asset rationalization that happened in the overseas entity for the advanced materials that actually led to the asset impairment loss of about KRW 50 billion. There was the derivatives valuation loss of KRW 30 billion. Including those two, the non-operating side, one-off expense was slightly over KRW 100 billion. One additional comment regarding your first question on OPM, and that figure does not actually include tax credit from the IRA. I'd like to just mention that the reason why we are focused on the sustainable target for the OPM is that you might remember, or historically, the renewable business or the solar business had demonstrated a very high degree of variability.
We want to move away from that, into a more solid, and a stable business structure. Of course, there could be even after this transition, the Q on Q variability, but hopefully in the long term basis, we might be able to demonstrate something sustainable, going forward. The following question will be presented by Jin Myung Lee from Shinhan Investment & Securities. Please go ahead with your question.
Two questions. First is about the chemicals, and there is a regular overhaul planned for the third quarter. What will be the opportunity loss that will be associated with it? It also mentioned about the recovery of the demand from China. Can you share your forecast or prospect per major items or, key products? The second question is, can you share the CapEx per business segment, and overall finance, financial structures and net borrowings and overall P&L? First, on PE, the demand from China is decline and there was Facility expansion for more capacity. Because of that, the market has been sluggish in 2022 and 2023 because of the prolongation of the slowing market. The demand for the PE product will remain slow.
This larger scale facility expansion is planned, so we cannot expect that there will be a major rebound in PE category, LDPE. There will be the 50% of the original volume to be that or they will go into the actual facility expansion. The pressure on the supply will be eased. The EVA, the EVA that goes for the solar panel, will increase as the solar business prospers. PVC. In case of PVC, the global economy, and also because of the sluggish Chinese property market, up until the Q4 of last year, the PVC price went down. Now we are seeing some signs of the rebounding of the price, maybe because of the expectation of the reopening of China.
It would not lead to the major rebound in the market condition because we are not yet seeing any major recovery in demand, and the facility expansion is happening on a limited basis. Given the fact and then expected economy recovery in the United States and European countries and possible rehabilitation after the war, then we could paint a rosier picture for PVC than before. There was a price decline in the caustic soda, and that we believe is not something structural. The sudden price increase that was instigated by the war in Ukraine are now becoming more stable. As you're aware that many of the caustic soda manufacturer, their operation was suspended during 2022.
For 2023, we expect the price of caustic soda will be maintained at the $500 range. The TDI cost has shown a favorable trend as the energy price is set at a very stable range and the price is going down. That also affects the price of ammonia positively. The spread will be maintained solid and the TDI market will remain solid as well. The regular overhaul is set for the fourth quarter. That is in line with the past practice and the opportunity costs associated with it will be about KRW 220 billion. Next about the CapEx, for FY 2022, the plan was somewhere between KRW 1 trillion-1.2 trillion.
It turned out that in actuality we have spent about KRW 1 trillion in CapEx. For FY 23, including the already published investment or the facility CapEx in the United States. The enterprise-wise the CapEx amount will be KRW 2.7 trillion.
To give you some breakdown by segment, the chemical will have about KRW 400 billion in CapEx. That is in the same range as that of 2022. Advanced material, KRW 200 billion, same range or slightly higher than that of 2022. The renewable that includes the investment plan for the United States and the current transition into the large area solar cell for wafer. It is part of the maintenance and the TOPCon and the cell module conversion. Those areas are included in the CapEx. Thank you for your participation. Now we will end our Hanwha Solutions Earnings Call for the fourth quarter of 2022. Thank you.