Trouble for the Formosa Petro-chemical Corp (FPC,
FPC's initial entry into the domestic petroleum market last August and subsequent giveaway promotions cut into CPC's daily gasoline sales by as much as 15 percent, according to reports.
But CPC executives claim that this margin has now been reduced to 8 percent.
CPC hit its profit target for the July 1999 to December 2000 fiscal year of NT$17.7 billion with "some luck as Formosa has encountered some problems," said a CPC executive who requested anonymity.
Even CPC chairman Chen Chao-wei (
Chen said that FPC's "less than ideal entry into the market had given CPC the opportunity to meet its net profit targets."
CPC posted pretax profit of NT$13.82 billion during the period from July 1999 to November, reaching nearly 78 percent of its target for the fiscal year which ended in December.
According to the unnamed CPC executive "FPC's only operational refinery at its Mailiao (
FPC executives said full production at the refinery would be restarted within a few weeks. The company's second refinery is scheduled to be on-line in early February, while operations at refinery number three depends on its market position in the coming months, he said.
FPC's lack of a nationwide storage and transportation system has forced the company to directly unload all imported gasoline from tankers to trucks, the executive said. Station operators at the 332 franchised Formosa Life Stations say that late deliveries are a big problem. Relying on only one receiving terminal and one refinery in Mailiao in central Taiwan, and with no supply pipelines criss-crossing the country, FPC has been unable to match the speed of delivery of its competitor.
CPC, meanwhile has four refineries, eight receiving terminals, pipelines linking north and south and storage facilities dotted all over the country. Another major factor buoying CPC's net profits was the apparent success of a recent promotional scheme.
During November and December, CPC offered one Nissan Sentra per day to lucky customers filling up at their stations, effectively outdoing an FPC promotion that offered fewer and less valuable gifts.
"The promotion really boosted sales," said the executive.
Nevertheless, CPC has lowered its net profit forecasts for 2001 to NT$5.5 billion, almost half that of last year, the executive said. CPC previously predicted the company could loose up to NT$60 billion annually after FPC entered the market.
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