Formosa Petrochemical Q1 profit rose 93 percent

Formosa Petrochemical Corp (台塑石化), the nation's only publicly traded oil refiner, said first-quarter profit rose 93 percent, the slowest pace in a year, as increased crude oil prices pushed up costs.

Net income rose to NT$17.3 billion (US$550 million) from NT$8.96 billion a year earlier, the company said in a stock exchange filing yesterday. That lags the six-fold gain in the fourth quarter and three-fold rises in the two preceding quarters.

"Its profit margins narrowed because oil prices surged," said Eric Chang, an analyst at Capital Securities Corp (群益證券), who has a "hold" recommendation on the stock.

Competition with Chinese Petroleum Corp (中油) gives Formosa Petrochemical little scope to raise prices, crimping the profit from processing each barrel of oil into fuels. Domestic retail gasoline prices rose less than 8 percent in the past year as crude oil futures in New York climbed 44 percent.

Formosa Petrochemical's refining margin, the difference between oil product prices and crude oil costs, averaged US$9.5 a barrel in the first quarter, company executive vice president Su Chi-yi (蘇啟邑) said on April 12.

That compares with US$11 in the fourth quarter and between US$7 and US$8 in the first quarter of last year, according to Polaris Securities Co (寶來證券) analyst Matthew Lin.

Profit surged to NT$21.1 billion in the October-December period, from NT$3.35 billion a year earlier, as fuel and chemical prices rose worldwide on demand from China.