Chinese polysilicon maker Daqo New Energy Corp (NYSE:DQ) fell to a net loss of USD 18.3 million (EUR 16.3m) in the third quarter of 2018, from a net profit of USD 24.1 million a year ago and USD 13.4 million a quarter ago.
The company decided in September to close its Chongqing subsidiary, including wafer manufacturing operations there, in response to challenging market conditions. Thus its results for the quarter include USD 6.8 million in fixed-asset impairment and USD 1.3 million in employee severance related to wafer manufacturing operations. Daqo also recognised a USD-11.4-million fixed assets impairment loss for polysilicon production equipment in Chongqing, as certain assets were deemed non-transferrable or not suitable for use by the firm’s polysilicon manufacturing business in Xinjiang.
When non-cash costs and expenses related to the Chongqing polysilicon operations, share-based compensation costs and long-lived assets impairments are excluded from the calculation, the adjusted net profit attributable to Daqo shareholders for the third quarter is USD 4.3 million.
| Results in USD million |
Q3 2018 |
Q2 2018 |
Q3 2017 |
| Net profit (loss) to shareholders |
(18.3) |
13.4 |
24.1 |
| Non-GAAP net income to shareholders |
4.3 |
18.2 |
25.6 |
| Operating profit |
4.0 |
18.0 |
22.8 |
| Operating margin |
5.9% |
28.6% |
31.3% |
| EBITDA from continuing operations |
14.8 |
27.4 |
31.9 |
| EBITDA margin |
22.0% |
43.6% |
43.8% |
| Gross margin |
19.1% |
40.1% |
36.7% |
| Revenues |
67.4 |
63 |
72.9 |
Profitability in the third quarter was hurt by lower average selling prices (ASPs), but lower polysilicon production costs helped in part offset that effect.
Daqo is expanding its manufacturing capacity and expected to ramp up its Phase 3B expansion in the first quarter of 2019, thus reaching a polysilicon production cost in Xinjiang of USD 7.50 per kg. Then, Phase 4A is planned to reach full production in the first quarter of 2020, boosting the firm’s total production capacity to 70,000 tonnes and cutting the overall total polysilicon cost to roughly USD 6.80 per kg.
The third-quarter polysilicon production volume reached 4,734 tonnes, down from 5,659 tonnes in the preceding quarter. The company expects to sell to external customers 6,800-6,900 tonnes of polysilicon in the fourth quarter of 2018. Full-year production is estimated at 23,000 tonnes.
(USD 1 = EUR 0.89)
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Author: Ken Teegardin. Licence: Creative Commons, Attribution-ShareAlike 2.0 Generic.
