Tue, Jul 05, 2011 - Page 12 News List

Plant closures decreasing revenues at Formosa firms

UNDER PRESSURE:Formosa subsidiaries saw revenue drops of up to 28.7% last month because of closures and Chinese fiscal measures, but their shares still rose

By Jason Tan  /  Staff Reporter

Four major subsidiaries of Formosa Plastics Group (台塑集團), one of Taiwan’s largest industrial conglomerates, posted slumps in revenue last month because of the ordered closure of their petrochemical plants and monetary tightening measures in China.

Nanya Plastics Corp (南亞塑膠), the world’s fourth-largest ethylene glycol producer, saw the steepest decline.

Nan Ya posted NT$11.7 billion (US$408 million) in sales last month, a 28.7 percent month-on-month decline.

Last month’s sales were 35.3 percent lower than the same month last year.

Formosa Plastics Corp (台塑), the nation’s largest maker of polyvinyl chloride and the group’s flagship company, reported NT$13.8 billion in sales — a decline of 17.7 percent from May, and a drop of 8.2 percent from June last year.

Formosa Chemicals & -Fibre Corp (台化) and Formosa Petrochemical Corp (台塑石化) saw month-on-month declines of 12.1 percent and 8.3 percent respectively.

‘SALT IN THE WOUND’

Nanya president Wu Chia-chau (吳嘉昭) told a press conference that the ordered closure of its five plants by the Yunlin County Government “had rubbed salt in the wound,” because China’s monetary tightening has already had a negative effect on the performance of the petrochemical industry.

On May 27, the Yunlin County Government made the unprecedented move of ordering Nan Ya to shut down five plants at its 50-hectare Haifeng (海豐) compound in Mailiao (麥寮), Yunlin County, after two fires broke out on May 12 and May 18.

The Haifeng facilities house five production lines that produce a number of key textile materials and petrochemical intermediaries, including 1,4 butylene glycol, ethylene glycol and bisphenol A.

Nanya had said in a filing to the Taiwan Stock Exchange that such a closure would incur financial losses of at least NT$8.4 million a day.

Wu said the company is actively negotiating with the county government to resume the plants’ operations.

The company said it has carried out safety inspections on all pipes and equipment at all five facilities.

SHARES UP

Despite the drop in sales, the four companies all saw their shares climb on the Taipei Stock Exchange yesterday before the earnings release.

Shares of Nanya climbed 1.7 percent to NT$78.3, while those of Formosa Plastics Corp rose 1.9 percent to NT$108.

Formosa Chemicals & Fibre closed up 1.9 percent to NT$107, while Formosa Petrochemical, the nation’s only publicly traded oil refiner, inched up 0.5 percent to NT$102.5.

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