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Daqo New Energy posts lower Q2 revenues amid altering solar policy in China


Daqo New Energy posts lower Q2 revenues amid altering solar policy in China

August 8 (Solar) – Chinese polysilicon maker Daqo New Energy Corp (NYSE:DQ) said on Tuesday its second-quarter attributable net profit improved to USD 13.4 million (EUR 11.5m) but revenues were down due to the uncertainty on the domestic solar market and its effect on downstream demand.

Nevertheless, chief executive Longgen Zhang said that the company is confident in the “long-term sustainable growth of the polysilicon industry” in spite of the policy changes and confirmed the full-year polysilicon production forecast for the company. He added that Daqo New Energy’s facilities are working at full capacity and customer demand and pricing have stabilised.

The Chinese firm managed to lift its attributable net profit to USD 13.4 million in April-June 2018 from USD 12.1 million a year before, and raised earnings before interest, tax, depreciation and amortisation (EBITDA) to USD 31 million from USD 29.8 million. This happened despite the fact that revenues declined to USD 67 million from USD 76 million a year back.

Revenues from polysilicon sales to external customers rose to USD 63 million from USD 61.1 million in the second quarter of 2017. However, they fell from USD 95.6 million in the previous quarter due to the drop in sales volumes and average selling prices after in May China unveiled new policies which reduce solar installation quotas and feed-in tariffs (FiT) for the second half of 2018.

The company sold 3,881 tonnes of polysilicon to external clients, down from 4,497 tonnes in the year-ago period. Its wafer sales volumes also experienced a drop to 9.8 million pieces from 13.3 million pieces in the first quarter and 27 million pieces in the year-ago period. Thus, revenues from wafer sales were down to USD 4 million from USD 7.6 million sequentially and from USD 14.9 million in the second quarter of 2017.

The table below gives more details about the company’s April-June performance.

Figures in USD million (unless otherwise noted) Q2 2018 Q1 2018 Q2 2017
Revenues 67 103.3 76
   — from polysilicon sales to external clients 63 95.6 61.1
   — from wafer sales 4 7.6 14.9
Gross margin (%) 40.6 44.8 31.9
Non-GAAP gross margin (%) 41.2 45.2 32.6
Operating profit 21 41.7 20.2
Non-GAAP EBITDA 31 51.7 29.8
Non-GAAP EBITDA margin (%) 46.3 50 39.2
Net income attributable to 
Daqo New Energy shareholders
13.4 31.6 12.1
Adjusted net income attributable to 
Daqo New Energy shareholders
18.2 32.9 13.8

The company’s CEO noted that utilisation levels and demand in the downstream segment have marked an improvement in July, as well as average selling prices. "Despite the challenging market environment in China, demand for solar PV products remains healthy and robust for the rest of the world. New emerging markets in Latin America and the Middle East are booming with growing demand", he added.

Daqo New Energy is conducting a capacity expansion programme and expects to commence pilot production in the fourth quarter of 2018 that will lift its manufacturing capacity to 30,000 tonnes. In the third quarter, it anticipates to produce 4,100-4,300 tonnes of polysilicon and sell between 5,900 tonnes and 6,100 tonnes to external customers. The forecast does not include shipments of polysilicon that will be used internally for solar wafer production. Third-quarter wafer sales volume is seen at 7 million-8 million pieces.

For the full year, the Chinese firm expects to produce between 22,000 tonnes and 23,000 tonnes of polysilicon.

(USD 1.0 = EUR 0.860)

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