Daqo turns to Q2 profit as revenues double y/y

Chinese polysilicon maker Daqo New Energy Corp (NYSE:DQ) has turned to a second-quarter (Q2) attributable net profit of USD 2.4 million (EUR 2m) from a loss of USD 2.2 million a year earlier as revenues doubled.

On a quarter-on-quarter basis, the attributable net profit dropped from USD 33.2 million.

At USD 133.5 million, the company’s top line was significantly higher compared to the USD 66 million in revenues generated in April-June 2019. However, it was below the USD 168.8 million recorded in the first quarter of 2020 primarily because of lower average selling price (ASP) combined with a lower polysilicon sales volume.

CEO Longgen Zhang explained that the abnormal market environment caused by the COVID-19 pandemic had led to a significant negative impact to polysilicon pricing for the three-month period.

“Fortunately, the impact was temporary, and the market began to recover in May with orders and demand normalizing in June, supported by a strong end-market in China and abroad," Zhang said, adding that a very positive momentum in solar photovoltaic (PV) demand was seen towards the end of the quarter, which also boosted demand for polysilicon and recently drove a significant increase in prices.

“We expect polysilicon supply to remain tight as the overall demand for PV solar continues to grow, supported by continued mono-wafer production capacity expansion and limited additional supply of polysilicon over the next 15 months," he noted.

During the second quarter of 2020, Daqo produced 18,097 tonnes and sold 18,881 tonnes of polysilicon, thus surpassing its forecast. However, the company expects lower production figures in the third quarter -- between 17,500 tonnes and 18,000 tonnes -- as a delay in the delivery of some key equipment has pushed some planned technology upgrades to September from August. The forecast for Q3 sales to external clients is 17,000-17,500 tonnes.

Still, Daqo is not changing its annual production guidance for 73,000-75,000 tonnes.

(USD 1.0 = EUR 0.844)

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