Daqo New Energy running out of money; polysilicon sales plummet

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

China-based polysilicon producer Daqo New Energy reported fourth quarter 2012 sales of only US$6.2 million, compared to US$21.1 million in the prior quarter.

The company shut its main polysilicon production plant in Wanzhou, China for annual plant maintenance during the fourth quarter – compared to just two weeks in 2011 – while ramping pilot production of its Phase 2 plant in Xinjiang, China.

Polysilicon shipments in Q4 2012 were 592MT, inline with previous guidance of 550-600MT, but down significantly from 834MT shipped in the fourth quarter of 2011. However, the company said that revenue from sales from polysilicon made at its Xinjiang facility during pilot production period were excluded from the revenues recorded in the quarter. Pilot production shipments from the new facility in the quarter was said to have been 323MT.

However, management noted in a conference call to discuss financial results that the company had sold off its total polysilicon inventory balance of 2,094MT from its Wanzhou facility in the quarter.

Daqo reported a small, 4.8MW of wafer shipments in Q4 2012, well below previous guidance of 10MW for the quarter. The company had also previously guided it would provide between 100-120MT of ingot and block manufacturing outsourcing services but reported shipments of 33MT of polysilicon ingots for the fourth quarter.

Major losses

Daqo continued to report quarterly losses. Fourth quarter gross loss was US$11.1 million, compared to US$10.8 million in the third quarter of 2012. Gross margin was negative 178.5%, compared to negative 51.1% in the third quarter of 2012.

The company reported a quarterly operating loss of US$55.9 million, compared to US$15.7million in the third quarter of 2012.

Due to the decline in wafer prices in 2012, Daqo made significant asset impairment charges against its wafer facilities of US$42.8 million.

Net loss was US$75.3 million compared to US$15.5 million in the third quarter of 2012.

For the full year 2012, Daqo reported a gross loss of US$37.4 million, compared to gross profit of US$87.2 million in 2011. Gross margin in 2012 was negative 43.1%, compared to positive 37.6% in 2011.

Operating loss was US$88.5 million, compared to operation income of US$50.8 million in 2011. Net loss in 2012 was US$111.9 million, compared to net income of US$33.3 million in 2011.

Daqo said that at the end of 2012 it had only US$17.3 million in cash and cash equivalents, a decrease of US$36.5 million from the prior quarter due primarily to debt repayments and the capital spending on plant upgrades at its Xinjiang facility.

However, management noted in the call that its working capital was negative US$164 million.

Bing Sun, chief financial officer of Daqo, said in the call: “We are confident that we can renew our credit facility of US$65 million in 2013 and obtain the remaining amount of US$36.5 million project loan with Bank of China related to Xinjiang Phase II projects. And the working capital deficit that we might have, we have already got the commitment from Daqo Group. Daqo Group has the ability and the will to financially support Daqo New Energy when necessary.”

Management also noted that polysilicon costs at Xinjiang were now below US$20/kg, importantly bringing production costs almost in line with current spot prices, something the company had previously been unable to achieve.

According to Gongda Yao, CEO of Daqo, the company had entered into new long-term supply agreements for polysilicon, resulting in the Xinjiang facility being “booked out”.

“We expect our Xinjiang facilities will start to generate positive cash flows in the first quarter of 2013,” added Yao in the conference call.

Q1 2013 guidance

Daqo said that it expected polysilicon shipments in the first quarter of 2013 to be around 720MT. Wafer shipments would decline to around 3.6MW and polysilicon ingots shipments would increase significantly to around 150MT metric ton. In addition, the company expects to ship 200MT of polysilicon to its internal wafer manufacturing business. Daqo does not provide revenue guidance. 

10 November 2021
The solar tracker market continues to mature at breakneck speed, with designs and component selections becoming ever-more complex in the pursuit of better project economics. But a more simplistic design could deliver a triple benefit of lower Capex, EPC and Opex costs. This webinar will set out the ideal single axis tracker design for utility-scale solar farms. The design leapfrogs from decades of experience, with a comprehensive understanding and attention to the three cost structures of Capex, EPC and Opx. Sun and Steel Solar has prototyped a single axis tracker designed to deliver up to US$0.03/W in real savings compared to existing single axis trackers on the market. That’s US$30 million for every gigawatt deployed.
15 November 2021
The 10th edition of the famous Metallization and Interconnection Workshop, MIW2021, will take place in the Thor Central venue in Genk, Belgium, on Monday, November 15, and Tuesday, November 16, 2021 as a face-to-face meeting. We are longing for direct exchange of knowledge and ideas after a long time. Hopefully you can be part of it! But of course, the organizors will keep an eye on the evolution of the Covid pandemic. It will be assess carefully, whether the workshop can be held without major risks or excessive restrictions. We are looking forward to exciting talks, discussions and meetings and to welcoming you in Genk!
23 November 2021
The solar, storage and EV industries in the UK are going from strength to strength. There is no better place for the community to meet, share ideas and do business than Solar & Storage Live from 23-25 November at the NEC.There’s something for everyone; more than 150 exhibitors, a high-level conference, a start up and innovation zone, a poster zone, strategic partners to network with and much more. 
1 December 2021
Understand fully the technical and logistical supply chains that determine the production and performance of solar modules, including all related factors impacting quality, reliability & bankability. This event will be run online with streamed content, access to session recordings and chat/messaging tools for delegates to connect.
2 December 2021
Intersolar is the world’s leading exhibition & conference series for the solar industry. As part of this event series, Intersolar India in Mumbai is India’s most pioneering exhibition and conference for India’s solar industry. It takes place annually and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. Since 2019, Intersolar India is held under the umbrella of The smarter E India – India’s innovation hub for the new energy world.
13 January 2022
Intersolar North America and Energy Storage North America “Come Together” for the first time in Long Beach, CA—connecting installers, developers, utilities, technology providers, policy makers, and key stakeholders from around the world to advance the clean energy future. With best-in-class conference programming, integrated exhibits and pavilions, and the live Solar Games installer competition, #isnaesna21 will showcase the industry trends, innovative solutions, and emerging talent transforming the solar, energy storage, and e-mobility markets. Register today to redeem our exclusive offer for PV Tech readers—free expo hall or 20% off full conference pass.

Read Next

October 21, 2021
A round-up of the latest news from the US solar market, featuring project financing from Cypress Creek and DE Shaw, SolarEdge project launches and solar loan securitisations from Sunnova and Mosaic.
PV Tech Premium
October 21, 2021
Chinese power restrictions are likely to change in Q1 next year and will consider the power necessity and industrial demand of certain regions. Nonetheless, polysilicon prices will remain high well into next year and could rise even further.  And, distributed solar is the future of solar PV generation in China.
October 21, 2021
US utility Hawaiian Electric is seeking proposals from resources including solar-plus-storage as part of its latest “all-source” renewables procurement round.
October 21, 2021
Tesla solar installations jumped by 46% year-on-year but fell slightly sequentially to 83MW in Q3 as the clean tech giant targeting greater profitability from its energy division.
October 20, 2021
Spain’s latest renewables auction closed with solar PV bidders being awarded just 866MW of capacity, with players such as Naturgy and Bruc among the winning participants.
October 20, 2021
The main shareholder of Falck Renewables is selling its controlling stake in the solar and wind developer to an investor advised by JP Morgan Investment Management.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
November 10, 2021
8am (PST) | 5pm (CET)
Solar Media Events
December 1, 2021