Polysilicon shipments up at Daqo New Energy but revenue down as losses continue

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Despite full-capacity utilization and increased shipments of polysilicon and wafers, Daqo New Energy suffered falling revenue and continued losses in the first quarter of 2012. Based-on previously guided poly production cost reduction timelines and current spot market pricing – Daqo is fighting a losing battle to sell polysilicon above cost level through 2012 and 2013.

The small polysilicon producer reported poly shipments of approximately 964MT in the first quarter, up from 834MT in the fourth quarter of 2011. Wafer shipments also increased from 7.8MW in 4Q11 to 23.4MW in 1Q12.

However, module shipments decreased in 1Q12, compared with the prior quarter for both ‘own-brand’ and OEM-brand. Own-brand shipments were 2.3MW, down from 9.6MW in 4Q11, while OEM module shipments fell to 2.4MW in 1Q12, compared to 5.9MW in 4Q11.

Total revenue in 1Q12 was US$34.0 million, compared to US$38.2 million in the fourth quarter of 2011 and US$87.3 million in the first quarter of 2011.

Daqo said that it had generated revenue of US$25.7 million from 964MT polysilicon sold, compared to revenues of US$25.1 million from 834MT of polysilicon sold in the fourth quarter of 2011 and revenues of US$77.7 million for 1,089MT of polysilicon sold in the first quarter of 2011.

Net margin was negative 42.0% in the first quarter of 2012 compared to negative 102.4% in the fourth quarter of 2011 and positive 40.4% in the first quarter of 2011.

Operating loss was US$12.1 million, compared to operating loss of US$49.9 million in the fourth quarter of 2011 and operating income of US$43.5 million in the first quarter of 2011.

“In the first quarter of 2012, we continued to operate our polysilicon production in full utilization. We exceeded our targets for shipments. Nevertheless, the solar PV market remains weak due to restrained demand as a result of uncertainties including changing governmental policies, tight credit markets and potential international trade conflicts.” commented Dr. Gongda Yao, chief executive officer of the company. “We will focus on the operation of our existing polysilicon site in Wanzhou and the construction of Phase 2 polysilicon plant in Xinjiang. We are confident that after our Phase 2 facilities commence production, we will be well positioned with a much lower cost structure and larger capacity.”

Daqo guided second quarter poly shipments to be in the range of 900-1000MT and approximately 20.5MW of wafers and 4.5MW of module shipments. However, Daqo expects to provide 200MT of ingot and block manufacturing outsourcing services to its customers in the quarter, the first time any shipments would have taken place in over six months.

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