Wed, Aug 15, 2007 - Page 12 News List

Top 50 firms thriving despite margin and political challenges

By Amber Chung  /  STAFF REPORTER

The nation's leading companies are thriving, but shrinking margins and uncertain government policies present tough challenges, Taiwan Ratings Corp (中華信評) said yesterday.

"Despite the pressure on profit margins, Taiwan's top 50 companies are showing across-the-board improvement in key credit measures, which were already at very strong levels in 2006," Daisuke Fukutomi, chief ratings officer at Taiwan Ratings, said in a report a report entitled Taiwan Top 50 Corporates, which was released yesterday.

Taiwan Ratings, the local arm of Standard & Poor's Ratings Services, expects top-tier companies to maintain or slightly strengthen their stable credit profiles this year, Fukutomi said.

Nonetheless, companies must maintain a close eye on international developments that could affect their operating performance, he said.

The nation's top 50 companies included Chunghwa Telecom Co (中華電信), China Steel Corp (中鋼), Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電).

High-tech firms continued to play a dominant role, accounting for 29 of the companies in the top 10 list.

A review of corporate profitability show that the operating margins have come under strong pressure and experienced a downtrend for the past five years, with the average ratio dropping to 11 percent last year from 16 percent in 2002, the study showed.

Government policies continue to exert a large influence in these companies' investment/cash allocation plans, and there are little signs showing that the trend will end any time soon, Taiwan Ratings said.

Several major investment plans by some of the top 50 companies are under government review for environmental impact assessment, which is a major concern of steel and petrochemical companies.

Meanwhile, political considerations overshadow other investment projects, such as a ban on investment in China by foundry and refinery industries, the ratings firm said.

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