Three of the four major units of Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, yesterday reported net profits last quarter, as income from dividends and foreign exchange gains helped pare their operating losses.
Formosa Plastics Corp (台灣塑膠) posted NT$1.23 billion (US$39.19 million), Nan Ya Plastics Corp (南亞塑膠) recorded NT$937 million and Formosa Chemicals and Fibre Corp (台灣化學纖維) posted NT$ 1.68 billion in net profit in the second quarter of the year, the companies said in separate regulatory filings.
However, Formosa Petrochemical Corp (台塑石化) swung into a net loss of NT$1.16 billion last quarter, from a net profit of NT$4.44 billion the previous quarter.
Photo: CNA
Overall, the four FPG units posted a combined net profit of NT$2.69 billion in the April-to-June quarter, down nearly 61 percent from a combined net profit of NT$6.89 billion three months earlier, as their operating income turned from profit to loss amid a negative macroeconomic situation that led to lower product prices and smaller sales volumes.
Formosa Plastics Corp, the group’s flagship company, said its net profit last quarter fell 47.7 percent from the previous quarter, with earnings per share (EPS) of NT$0.19.
The company’s operating income turned into a loss of NT$2.4 billion last quarter, as the prices of petrochemical products declined due to competition from its US rivals and a slow economic recovery in China, it said.
The company’s sales in the second quarter declined 7.2 percent quarter-on-quarter to NT$48.45 billion, and it expects sales momentum this quarter to stabilize as the industry enters the high season benefiting demand for products including polyvinyl chloride (PVC) and Ethylene vinyl acetate (EVA) as well as due to the firm's improved capacity utilization.
Nan Ya Plastics Corp, the nation’s largest plastics maker, said its EPS last quarter grew 8.2 percent quarter-on-quarter to NT$0.12, as income from plastic processing products and polyester products increased and losses from chemical products decreased, while profit from electronic material products fell as the tech industry entered a slack season.
While the company’s sales last quarter dropped 3.1 percent from a quarter earlier to NT$63.74 billion, and the firm booked investment losses of NT$210 million in the quarter, dividend income and foreign-exchange gains helped boost its profitability, it said.
Nan Ya said sales generated from electronic material products are expected to increase this quarter on the back of seasonal demand and the end of investment adjustment in the electronics industry, but sales of polyester and chemical products would be flat from last quarter due to some negative factors, such as declining raw material prices, an increase in supply in the market and more competition from foreign peers.
Formosa Chemicals and Fibre, which manufactures aromatics and styrenics, said its EPS for last quarter stood at NT$0.29, compared with losses per share of NT$0.13 the previous quarter, aided by non-operating profit, which increased by NT$3.55 billion from three months earlier.
The company posted operating losses of NT$3.15 billion in the second quarter, mainly impacted by falling product prices, maintenance work at its third aromatics plant and third styrene monomer (SM) plant, inventory impairment losses, as well as slower capacity utilization rate and shipments of acrylonitrile butadiene styrene (ABS), polypropylene (PP) and purified terephthalic acid (PTA) products amid weak demand.
But Formosa Chemicals forecast that sales for this quarter would improve from last quarter’s NT$75.17 billion, which declined 9.5 percent sequentially, as petrochemical product prices are projected to rebound given a gradual demand recovery, while inventory adjustment is also expected to come to an end.
Formosa Petrochemical, which posted losses per share of NT$0.13 last quarter, said last quarter’s results came as its refining, naphtha cracking and utility businesses all took a downturn, which caused second-quarter revenue to fall 13.7 percent to NT$159.4 billion from a quarter earlier.
The nation’s only listed oil refiner posted operating losses of NT$6.47 billion last quarter, compared with an operating income of NT$4.28 billion the previous quarter.
Formosa Petrochemical said it was cautious about its sales outlook for this quarter, citing a slow recovery in China, a manufacturing slump in the US and Europe, and the effects of global central banks’ monetary tightening, which would dent oil demand.
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