Formosa Plastics Group’s (FPG, 台塑集團) four major subsidiaries yesterday posted monthly declines in revenue of more than 10 percent last month, and said the weakness would likely remain throughout this quarter as macroeconomic uncertainty continues to curb demand.
Petrochemical producer Formosa Plastics Corp (FPC, 台塑), the group’s flagship company, saw revenue tumble 16.7 percent month-on-month to NT$19.94 billion (US$664.76 million) as inflation and rising inventory in the supply chain curtailed demand for home appliances and consumer electronics, the firm said in a filing with the Taiwan Stock Exchange.
As central banks worldwide raise interest rates to rein in rising inflation, their actions have reduced disposable income and weakened purchasing power, which has in turn affected demand for FPC’s products and undercut its product prices.
Photo: Taipei Times File Photo
Prices of FPC’s products dropped 5 to 10 percent last month from June, according to its filing.
“As market demand became conservative, the company maintains its forecast for revenue in the third quarter to be lower than in the second quarter,” FPC chairman Jason Lin (林健男) said.
The firm also expects lower production this quarter as it has idled some equipment to match Formosa Petrochemical Corp’s (台塑石化) regular equipment maintenance, Lin said.
Formosa Petrochemical, the group’s oil refining subsidiary, reported that revenue last month fell 13.4 percent monthly to NT$76.59 billion due to sluggish demand for olefin products, a type of chemical that includes ethylene and propylene, and fewer refining oil shipments due to delays in shipping schedules.
The firm said that outlook for this month would improve slightly as a reduction in output by major oil producers provides support to global crude oil prices.
Nan Ya Plastics Corp (南亞塑膠), another FPG subsidiary, reported that revenue last month dropped 13 percent monthly to NT$27.97 billion, in line with the firm’s estimate.
Nan Ya attributed the decline to a significant reduction in ethylene glycol production as it aimed to narrow losses, while the company shipped less bisphenol A last month, and prices dipped from June due to excessive inventory, it said.
Revenue this month is expected to rebound slightly from last month, but revenue for this quarter would be lower than that in the previous quarter, the company said.
Formosa Chemicals and Fibre Corp (台灣化纖), another FPG subsidiary, said revenue fell 14.3 percent month-on-month to NT$31.25 billion due to drops in demand and prices.
The maker of integrated plastic and nylon products expects revenue this quarter to decline from last quarter, with shipments and prices to decline significantly, it said.
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