Daqo New Energy posts $23 million net profit in Q1

Revenue soared 81.8% from the final three months of 2016 to $83.8 million. Earnings before interest, tax, depreciation and amortization (EBITDA) spiked from $17.6 million in the fourth quarter of 2016 to $41.7 million. Basic earnings per American Depositary Share (ADS) jumped from $0.39 in the preceding three-month period to $2.18, said the company, which is listed on the New York Stock Exchange.

External sales of polysilicon by volume soared 91.2% from a year earlier to 4,223 metric tons (MT) in the January-March period. External sales excluded internal sales to the company’s wafer production unit in the Chinese city of Chongqing, which uses polysilicon as a raw material to make solar wafer. Sales of solar wafers by volume hit 22.4 million units in the first quarter, from 21.3 million units in the October-December period.

Daqo ramped up polysilicon production at its facility in China’s Xinjiang region to 18,000 MT of annual capacity. The production expansion was completed ahead of schedule, it said in an online statement. It described the January-March period as its “best quarter ever in terms of cost structure, production volume and polysilicon quality.”

Production of polysilicon doubled from the previous year to 4,927 MT, while average productions costs fell by $1.57/kg from the fourth quarter of 2016 to $8.41/kg. The average selling price of polysilicon rose from $14.96/kg in the preceding quarter $16.66/kg.

“Polysilicon market demand weakened towards the end of March, resulting in inventory build-up across the industry, with price adjustments reflecting the weakness,” said chief executive Gongda Yao.

“We saw market conditions stabilizing towards the end of April with strong demand recovery, as industry poly inventory re-adjusted to a healthy level.  Polysilicon pricing also improved meaningfully in late April, with robust customer demand.” The company sees overall polysilicon demand as “healthy,” despite potential ASP volatility.

Throughout the rest of this year, Daqo will focus on reducing costs. It expect to produce between 4,800 MT and 5,000 MT of polysilicon in the second quarter, with external sales likely to range between 4,200 MT and 4,500 MT. Sales of wafers by volume are set to increase to as high as 24 million units.

It recorded a net profit of $43.5 million in 2016, up sharply from $13 million a year earlier.