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Daqo New Energy posts loss in Q2

Author: Ken Teegardin. Licence: Creative Commons, Attribution-ShareAlike 2.0 Generic.

August 14 (Renewables Now) - China’s Daqo New Energy Corp (NYSE:DQ) today reported a net loss of USD 2.2 million (EUR 2m) for the second quarter of 2019, in which it completed a capacity debottlenecking project and carried out annual maintenance.

These activities led to higher polysilicon production costs, which combined with lower average selling prices (ASPs) resulted in a gross margin of just 13%. This is down from 22.6% in the first quarter of 2019 and 40.1% in the second quarter of 2018. 

The company produced 7,151 tonnes of polysilicon at a total production cost of USD 8.12/kg, up from USD 7.42/kg in the preceding quarter. Sales stood at 7,130 tonnes, of which roughly 80% to mono customers.

CEO Longgen Zhang said the reporting period was quite challenging for the polysilicon industry as prices dropped to "their lowest levels in history", especially for multi-grade polysilicon. Prices are seen to begin to improve in the third quarter. Zhang added that "the pricing spread between mono-grade and multi-grade polysilicon products will likely remain significant, because output of mono-grade polysilicon still lags behind market demand and new capacities of mono wafer are still growing."

Daqo’s results are in the table.

All in USD million Q2 2019 Q1 2019 Q2 2018
Revenue 66 81.2 63
EBITDA from cont. operations 10.2 20 27.4
Profit (loss) from operations (0.4) 9.2 18
Net profit (loss) to Daqo shareholders (2.2) 6.6 13.4
Non-GAAP net profit to Daqo shareholders 2.3 11.1 18.2

The company expects to produce 9,200 to 9,500 tonnes of polysilicon in the third quarter at a total production cost of about USD 7.5/kg. The share of mono-grade polysilicon sales is forecast to inch up to 85%.

(USD 1 = EUR 0.89)

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Browse all articles from Tsvetomira Tsanova

Tsvet has been following the development of the global renewable energy industry for almost nine years. She's got a soft spot for emerging markets.

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