May 22 (Renewables Now) - Chinese polysilicon maker Daqo New Energy Corp (NYSE:DQ) on Tuesday reported a drop in first-quarter attributable net profit but said polysilicon production and external sales volumes have reached record-high levels.
The Chinese firm closed the January-March quarter with an attributable net profit of USD 6.6 million (EUR 5.9m), down from USD 31.6 million a year before and from USD 11.4 million in the previous quarter. This result includes an USD-800,000 income from the disposal of fixed assets which were previously impaired following Daqo New Energy’s decision to close its Chongqing subsidiary, including wafer manufacturing operations there, in September 2018. Тhe move was undertaken as a result of challenging market conditions.
When non-cash costs and expenses related to the Chongqing polysilicon operations and share-based compensation costs are excluded from the calculation, the adjusted net profit attributable to Daqo shareholders for the first quarter stands at USD 11.1 million, as compared to USD 32.9 million in the year-ago period.
The following table presents more details about the company's first-quarter performance.
|Results in USD million||Q1 2019||Q1 2018|
|Net profit (loss) to shareholders||6.6||31.6|
|Operating margin (%)||11.3||41|
|EBITDA from continuing operations||20||48.6|
|EBITDA margin (%)||24.6||50.8|
|Gross margin (%)||22.6||45|
In line with the sequential drop in the average selling price of polysilicon, from USD 9.69 per kg to USD 9.55 per kg, Daqo New Energy’s polysilicon average total production costs declined to 7.42 per kg in the first quarter from USD 7.94 per kg in the last quarter of 2018. This, together, with a decrease in polysilicon average cash cost had a positive effect on the company’s first-quarter performance, CEO Longgen Zhang said.
First-quarter polysilicon production volume reached 8,764 tonnes, rising from 7,301 tonnes in the preceding quarter, while polysilicon external sales volume rose to 8,450 tonnes from 7,030 tonnes after the Phase 3B expansion in Xinjiang.
Daqo is expanding its manufacturing capacity through a debottlenecking project to boost its production capacity by an additional 5,000 tonnes by early June. As a result, the company will reach a total annual production capacity of 35,000 tonnes at a cost of around USD 7.5 per kg. Meanwhile, a Phase 4A capacity expansion is also ongoing and when it reaches full production it will boost the firm’s total production capacity to 70,000 tonnes by end-2019, further cutting the overall total polysilicon cost.
Taking into account the debottlenecking project’s temporary impact on production volume and cost structure, Daqo New Energy expects to produce between 7,200 and 7,400 tonnes of polysilicon in the second quarter, at a total cost of USD 8-8.5 per kg. Polysilicon sales to external customers, meanwhile, are seen at 7,100-7,300 tonnes, with the total production cost normalising at USD 7.5 per kg in the third quarter. Full-year production volumes are expected to range between 37,000 and 40,000 tonnes.
(USD 1.0 = EUR 0.896)