Formosa Chemicals & Fibre Corp (台灣化纖), a unit of Taiwan’s biggest diversified industrial group, said earnings had improved after a loss in the first quarter, prompting the company to approve investments in chemical plants.
“Earnings are pretty good in the second quarter,” Hong Fu-yuan (洪福源), Formosa Chemicals president, told reporters after a shareholder meeting yesterday, declining to give estimates. “We’re running our plants at almost full capacity.”
Changhua County-based Formosa Chemicals makes petrochemicals used in textiles, plastics, auto parts and components for electronics products.
A stimulus package from China including subsidies for purchasing home appliances helped boost demand for the company’s products, Hong said.
Shareholders approved the use part of last year’s earnings on production lines of meta-xylene, ethylbenzene and styrene monomer — raw materials used to make plastics.
Investment will total NT$2.45 billion (US$75 million) and construction is scheduled to be completed by December next year, the company said in a report to shareholders on Friday.
The company posted a loss of NT$2.58 billion in the first quarter, compared with a profit of NT$5.19 billion a year earlier, Formosa Chemicals said in a stock exchange filing on April 29.
Parent Formosa Plastics Group (FPG, 台塑集團) controls Nan Ya Plastics Corp (南亞塑膠), the world’s biggest processor of plastics for pipes and imitation leather, and Formosa Petrochemical Corp (台塑石化), the island’s only publicly traded oil refiner.
Formosa Chemicals climbed 0.3 percent to NT$49.75 in Taipei trading before the meeting. The stock has risen 24 percent this year, compared with the 36 percent gain in the benchmark TAIEX index.
Formosa Chemicals had an 87 percent decline in profit last year as the global recession reduced demand for its products. Net income fell to NT$6.1 billion, the company said in a statement to the Taiwan Stock Exchange on March 26.
China’s State Council said last month the government will provide subsidies of 2 billion yuan (US$293 million) to encourage consumers to replace old home appliances with new ones. China is Taiwan’s biggest export market, accounting for around 41 percent of the total last month, Ministry of Finance data showed.
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