Nan Ya Plastics Corp (南亞塑膠), the world’s largest processor of plastics for pipes and imitation leather, posted a 10 percent decline in second-quarter profit, as gains in product prices failed to cover surging costs.
Net income fell to NT$10.7 billion (US$339 million), from NT$11.9 billion a year earlier, higher than the median estimate of NT$9.8 billion in a Bloomberg survey of four analysts.
The profit figure was derived by deducting first-quarter earnings from six-month results the company announced yesterday.
Nan Ya Plastics failed to pass on rising costs of ethylene, a raw material for chemical fibers and plastics, because of weak demand from textile makers in China, Taiwan’s biggest overseas market. Ethylene glycol, used to make polyester in fabrics, is Nan Ya Plastics’ biggest revenue source.
The average ethylene price in Northeast Asia surged 36 percent from a year earlier in the second quarter, outpacing the 19 percent gain in Taiwan’s ethylene glycol prices, oil-pricing service Platts said.
Nan Ya’s second-quarter sales climbed 18 percent from a year earlier to NT$63.4 billion, monthly filings to the Taiwan Stock Exchange show. Ethylene glycol accounted for 25 percent of revenue.
Nan Ya president Wu Chia-chau (吳嘉昭) confirmed the derived earnings by telephone.
First-half net income fell 18 percent to NT$18.8 billion, or NT$2.47 per share, the company said.
Nan Ya Plastics climbed by 0.9 percent to NT$49.65 on the Taiwan Stock Exchange before the announcement. It has dropped 42 percent this year, compared with the 17 percent decline in the TAIEX.
Nan Ya Plastics owns 38 percent of Nanya Technology Corp (南亞科技), Taiwan’s second-biggest memory-chip maker, which reported losses for five straight quarters because of a glut.
Nan Ya Plastics plans to sell as much as NT$10 billion of bonds to repay existing debt, it said in a statement to the Taiwan Stock Exchange yesterday.
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