China-based photovoltaic (PV)-grade polysilicon manufacturer Daqo New Energy Corporation, in the second quarter (Q2) of the financial year (FY) 2023, reported a net income of $103.7 million, an 83.5% decrease from $627.8 million in the corresponding period in 2022.
In the second quarter of 2023, the company’s revenues amounted to $636.7 million, a 48.8% year-over-year (YoY) decrease.
The decline in revenues from the previous quarter was mainly attributed to a decrease in polysilicon’s Average Selling Price (ASP), offset partially by increased sales volume.
The polysilicon ASP was $12.33/kg in Q2 2023. The sales volume was recorded at 51,550 MT, with an average total production cost of $6.92/kg.
The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at $230 million, a substantial decrease of 75.9% YoY compared to $955.4 million.
In the second quarter of 2023, the company also incurred a foreign exchange loss of $19.7 million, contrasting with no foreign exchange loss recorded in both the first quarter of 2023 and the second quarter of 2022.
The company said the considerable instability and fluctuations in the USD/CNY exchange rate during this period led to an unrealized foreign exchange loss, primarily associated with the quarter-end cash balance of RMB 3.1 billion (~$431 million) held by the company in an offshore account.
In the first half (1H) of 2023, the company achieved a net income of $382.53 million, a decline of 67% YoY compared to $1.16 billion.
Daqo’s revenue for the same period amounted to $1.35 billion, a 46.4% YoY decrease.
The company’s EBITDA stood at $720.21 million, a YoY decrease of 59.5%
During 1H of 2023, net cash provided by operating activities was $786.3 million, a YoY decrease of 30% compared to $1.13 billion in the same period of 2022.
Net cash used in investing activities was $495.7 million, compared to $80.3 million in the same period of 2022. This increase in cash used was mainly due to capital expenditures on the company’s polysilicon project in Baotou City, Inner Mongolia.
Net cash used in financing activities was $477.5 million, compared to $1,579.3 million in the same period of 2022.
The decrease in net cash provided was primarily related to $173.8 million used for stock repurchases and $303.6 million in dividend payments made by the company’s Xinjiang Daqo subsidiary to its minority shareholders.
During the earnings call, Longgen Zhang, CEO of Daqo New Energy, commented, “The polysilicon industry experienced increased challenges and substantial price volatility during the second quarter. As several new polysilicon facilities and new entrants finally started production, with some reaching full production in the first half of this year, the shortage of polysilicon for the past two years came to an end. The increased supply ultimately led to relative oversupply and excess industry inventory.”
The company reported a net income of $278.8 million in the first quarter (Q1) of 2023, corresponding to a 48% YoY decline, primarily due to lower demand and lower average selling price (ASP) for its products.
Mercom recently reported on how solar manufacturers in China have scaled up capacity as the price of polysilicon materials dropped by almost 50% during the first half of 2023.
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