The four major units of Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, on Wednesday reported their net profits last quarter all fell from the previous quarter due to a decrease in non-operating income and the impact of foreign exchange losses.
This quarter, the four units — Formosa Plastics Corp (台灣塑膠), Nan Ya Plastics Corp (南亞塑膠), Formosa Chemicals and Fibre Corp (台灣化學纖維) and Formosa Petrochemical Corp (台塑石化) — are expected to see their operations affected by low oil prices and weak seasonal demand for oil products, analysts said.
Factors such as soft petrochemical demand amid a slow China recovery, disruption during the Lunar New Year holiday and fierce market competition amid new capacity ramp-up in foreign markets would also weigh on the units’ business performance, they added.
Photo: Taipei Times File Photo
“In the mid-to-long term, we anticipate a weak demand recovery overall, given persistent sector oversupply as China and the US continue to ramp up new capacity,” Yuanta Securities Investment Consulting Co (元大投顧) analysts said in a research note on Thursday. “For this year, with demand to recover as inventory adjustment ends, we expect Formosa Plastics, Nan Ya Plastics and Formosa Chemicals to see sales and earnings improve. However, carbon fee levies from this year will negatively impact earnings.”
During the October-to-December quarter, Formosa Plastics swung into a net loss of NT$2.88 billion (US$92.52 million) due to annual maintenance and demand weakness, as well as narrower investment gains, while Nan Ya Plastics saw its net profit contract 96.8 percent sequentially to NT$140 million on fewer investment gains and higher foreign exchange losses, the companies said in separate regulatory filings.
Formosa Chemicals’ net profit plunged 99.2 percent quarter-on-quarter to NT$574 million, hit by weakened demand and oversupply in China, coupled with narrower investment gains. Formosa Petrochemical’s net profit also fell 91.7 percent to NT$1.43 billion in the past quarter, given a slump in oil prices, narrower refinery and olefin product spreads, and inventory impairment and foreign exchange losses, their filings showed.
The FPG units posted a combined net profit of NT$44.01 billion last year, down 51.2 percent from a year earlier, as their operating income turned from profit to loss amid a negative macroeconomic environment that led to lower product prices and smaller sales volumes.
The four units' combined operating profit plunged 82.7 percent year-on-year to NT$58.96 billion, while revenue fell nearly 18 percent to NT$1.83 trillion compared with a year earlier.
Formosa Plastics, the group’s flagship company, reported its net profit last year fell 79.7 percent from the previous year to NT$7.35 billion, or earnings per share (EPS) of NT$1.15, and Nan Ya Plastics, the nation’s largest plastics maker, saw its net profit drop 80.4 percent to NT$6.31 billion, or EPS of NT$0.8.
Formosa Chemicals, which manufactures aromatics and styrenics, said its net profit grew 15.3 percent to NT$8.49 billion, or EPS of NT$1.45.
Formosa Petrochemical, the nation’s only listed oil refiner, reported its net profit rose 51.6 percent to NT$21.86 billion, or EPS of NT$2.3.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Japanese Minister of Finance Katsunobu Kato said. “We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato said yesterday in an interview with Fuji Television. Japan is very concerned about how the tariffs might impact the global economy, he added. Kato spoke as nations and firms brace for potential repercussions after Trump unleashed the first salvo of
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
RSS