- Daqo New Energy’s 2023 revenues declined by 50% as lower ASPs continued to make a dent
- It met the annual production guidance and sold 50.5% more on an annual basis
- Daqo worked with lower inventory in Q4/2023 to hedge itself during the off-season period
- The management guides for 2024 full-year production volume to be 40% to 50% higher annually, between 280,000 MT and 300,000 MT
Leading Chinese polysilicon producer has reported a 50% decline in its annual revenues for 2023, blaming it on lower ASPs, but the decline was partially offset by higher sales volume. The management guides for up to 50% higher production volume for 2024.
Full year 2023
Daqo’s Chairman and CEO Xiang Xu called 2023 a year of unforeseen developments and challenges in the solar industry as well as record-low prices and installation volumes.
“Despite robust demand growth for solar PV products globally in 2023, the high polysilicon prices driven by capacity mismatches between upstream and downstream players and the resulting supply shortages that we had seen in 2022 were alleviated by early 2023,” explained Xu. “As a result, polysilicon ASPs declined significantly for the year to $11.48/kg from $32.54/kg in 2022.”
As a result, the manufacturer’s 2023 revenues declined to $2.3 billion compared to $4.6 billion in the previous year (see Daqo New Energy’s 2022 Revenues Shot Up 175% YoY).
Its net income for the year declined by almost 77% to $421.2 million, while gross profit of $920.7 million was an annual drop of 73%.
Nonetheless, Daqo met its annual production guidance with 197,831 MT, representing a 47.8% annual growth. It sold 50.5% more with 200,002 MT, riding on the high demand for solar last year.
Q4/2023
During Q4/2023, revenues dropped slightly from $484.8 million in the previous quarter to $477.1 million, yet gross profit and margin both jumped up.
The company sold 59,906 MT in Q4, while it produced 61,014 MT thanks to its new Inner Mongolia 5A facility contributing 45% of the total production volume. Demand was strong for n-type polysilicon.
ASPs during the quarter went up to $7.97/kg, compared to $7.68/kg in Q3/2023 (see Polysilicon Price Dynamics Impact Daqo’s Q3/2023 Results).
The management said it worked with little inventory during the quarter, with less than 1 week of production volume across its 2 facilities. This strategy helped it ‘hedge against downside risks during the off-season period.’
Xu added that polysilicon production volumes in China continued to increase on a month-over-month basis in Q4 on the supply side. Most of this growth was contributed by Tier 2 and Tier 3 manufacturers, including new entrants. He said, “However, leading high-quality manufacturers produced less than anticipated, widening the price gap between high quality manufacturers and Tier-2 companies.”
Guidance
In Q1/2024, Daqo will produce approximately 60,000 MT to 62,000 MT, similar to its Q4/2023 volume. With its new Inner Mongolia 5B fab scheduled to be commissioned in Q2/2024, the management guides for full-year production volume to be 40% to 50% higher annually to between 280,000 MT and 300,000 MT.
