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Profit doubles at Nan Ya Plastics as ethylene glycol orders gain steam

Nan Ya Plastics Corp (南亞塑膠), Taiwan's largest plastics maker, exceeded analysts' forecasts by doubling second-quarter profit, on surging demand for ethylene glycol, a petrochemical product used to make polyesters.

Net rose to NT$9.6 billion (US$284 million) from NT$4.7 billion a year earlier. The second-quarter figure was derived by subtracting first-quarter profit from first-half results filed with the stock exchange. Sales in the six months rose 34 percent to NT$40.7 billion, based on earlier monthly reports.

Analysts had forecast net profit of NT$8.6 billion for the second quarter, based on the median estimate in a Bloomberg News survey of four analysts.

First-half profit rose to NT$18.3 billion, or NT$2.62 a share, from NT$8.2 billion, or NT$1.32. First-half sales increased 31 percent to NT$77.3 billion from NT$58.9 billion.

Stronger sales of ethylene glycol and higher demand for the memory chips sold by affiliate Nanya Technology Corp (南亞科技) have been helping drive profit growth at Nan Ya Plastics, analysts said. The company's second-quarter ethylene glycol sales rose three times from a year ago to NT$5.2 billion, according to its monthly sales reports.

Demand for ethylene glycol has increased as China expands polyester production, said Eric Chang, an analyst at Capital Securities Corp (群益證券) in Taipei. Chinese textile companies need more polyester as they prepare for the lifting of global import quotas next year, Chang said.

Ethylene glycol prices rose almost half in the second quarter from a year ago, according to a Morgan Stanley & Co report.

The company has diversified into electronics in recent year, including materials used to make printed circuit boards. Profit and sales will increase in the second half, Nan Ya said in a statement.

Higher memory-chip prices are helping to lift earnings at Nan Ya Plastics' 44 percent-owned Nanya Technology, Taiwan's largest memory-chip maker by sales last year. The affiliate posted a NT$3 billion profit in the second quarter, compared with a loss of NT$974 million a year earlier.

Spot prices for a benchmark 256-megabit, 333-megahertz double-data-rate dynamic random access memory chip averaged US$5.15 in the second quarter, compared with US$3.48 a year earlier, according to Dramexchange.com, Asia's biggest spot market for memory chips.

The commodity chips account for about 90 percent of Nanya's output.
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