Wed, Jan 04, 2012 - Page 12 News List

FPG subsidiaries plunge into the red

TOUGH TIMES:Of FPG’s four major subsidiaries, only Formosa Plastics was in the black, although its fourth quarter earnings were down 90.5 percent from the previous quarter

By Jason Tan  /  Staff Reporter

Three of Formosa Plastics Group’s (FPG, 台塑集團) four major subsidiaries plunged into the red in the fourth quarter last year as weakened demand from the US, Europe and China, coupled with the compulsory shutdown of some of its facilities, took a toll on earnings.

Formosa Plastics Corp (台塑) was the only firm to be in the black, while Nan Ya Plastics Corp (南亞塑膠), Formosa Chemicals & Fibre Corp (台灣化纖) and Formosa Petrochemical Corp (台塑石化) all took losses.

Plastics processor Nan Ya posted a loss of NT$1.57 billion (US$52 million) in the fourth quarter, down from NT$6.48 billion in the previous quarter, according to the parent group’s statement.

This translated to a loss of NT$0.2 per share, down from an earning of NT$0.83 a share in the third quarter.

For the whole of last year, Nan Ya’s earnings declined 39.6 percent from a year ago to NT$28.06 billion.

Chemicals producer Formosa Chemicals & Fibre lost NT$2.21 billion, down from NT$7.58 billion in the third quarter. This translated to a loss of NT$0.39 per share in the last quarter, compared with an earning of NT$1.34 per share in the previous three months.

Its profits last year also dipped 27.7 percent year-on-year to NT$36.41 billion.

Formosa Petrochemical saw its losses widen to NT$4.39 billion, up from NT$1.42 billion in the third quarter. The loss per share increased to NT$0.46 from NT$0.15.

The oil refiner saw the steepest decline in annual earnings among the four subsidiaries. It saw its earnings plunge by 44.4 percent year-on-year to NT$24.7 billion last year.

Polyvinyl chloride maker Formosa Plastics earned NT$941.82 million in the fourth quarter. However, that was a 90.5 percent decrease from NT$9.94 billion in the third quarter.

Its annual earnings were also down by 21.2 percent to NT$40.38 billion last year.

FPG has been engulfed by a series of industrial safety accidents since July 2010 as one fire after another broke out at its Mailiao (麥寮) petrochemical complex in Yunlin County, where pipelines and machinery had been weakened by corrosion because of its coastal location.

In late July, the government issued FPG an ultimatum and demanded that all its Mailiao facilities be suspended in stages within a year for safety inspections.

FPG yesterday said another factor that helped drag its business into the red was sluggish demand from the US and Europe.

The implementation of monetary tightening measures in China also meant demand had been suppressed, the group said.

Formosa Chemicals and Fiber president Hong Fu-yuan (洪福源) told reporters at a press conference that the prospects for the four subsidiaries in the current quarter were poor given the sluggishness of the macro-economic environment.

“This will be a difficult year for the petrochemical industry,” he said.

Formosa Plastics Corp president Jason Lin (林健男) also expressed caution about the outlook for the first quarter.

“If prices and sales continue to fall, the first-quarter outlook could be the same as the previous quarter,” Lin said at the same press conference.

However, the group said that because 11 items listed on the early-harvest list of the Economic Cooperation Framework Agreement, a trade pact signed by Taiwan and China in the middle of 2010, would see tariffs cut to as low as zero percent this year, it would save about NT$630 million in taxes.

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