Formosa Plastics Corp (台塑), the nation’s largest maker of polyvinyl chloride, said yesterday its board had approved a proposal to distribute a NT$4 cash dividend per common share based on last year’s earnings, which were lower than the previous year because of the global economic slowdown.
The company said its board also gave the green light to plans to issue unsecured corporate bonds to repay debt and to increase investment in a steel plant in Vietnam’s Ha Tinh Province, according to various filings to the Taiwan Stock Exchange issued yesterday.
The company’s proposed cash dividend, if approved by shareholders on June 19, would be 41.18 percent lower than the NT$6.8 that Formosa Plastics paid the previous year.
Formosa Plastics is the flagship company of the Formosa Plastics Group (台塑集團).
Two of its affiliates under the group announced their dividend plans last week, with Formosa Petrochemical Corp (台塑石化) planning to distribute NT$2 in cash per share, and Formosa Chemicals & Fibre Corp (台灣化纖) paying out NT$4 in cash.
Nan Ya Plastics Corp (南亞塑膠), another group member and the nation’s largest plastics maker, is scheduled to announce its dividend plans after a board meeting on Friday.
With Formosa Plastics’ stock price closing at NT$88.9 yesterday, its proposed cash dividend of NT$4 translates into a dividend yield of 4.5 percent.
That would be higher than most local banks’ fixed-term deposit interest rate and higher than the 2.2 percent offered by Formosa Petrochemical, whose shares closed at NT$91.3 yesterday, but lower than the 4.68 percent offered by Formosa Chemicals, based on its share price of NT$85.5.
Formosa Plastics’ dividend payout ratio will be 68.49 percent, as the Taipei-based company’s net profit last year plunged 21.58 percent to NT$35.72 billion, from NT$45.55 billion in 2010, with earnings per share falling to NT$5.84 from NT$7.44 a year earlier. The lower performance was because of the eurozone debt problem and China’s credit tightening.
Meanwhile, the company said in separate filings to the Taiwan Stock Exchange that its board also approved a plan to raise as much as NT$12 billion (US$406.4 million) by issuing seven-year unsecured corporate bonds this year to repay debt and improve its financial structure.
In addition, the company said the board agreed to invest US$170 million in Formosa Ha Tinh Steel Corp (台塑河靜鋼鐵興業), a steel mill wholly owned by the Formosa Plastics Group in Vietnam.
The new funds will increase Formosa Plastics’ shareholding in the steel plant to 21.25 percent, after the group said earlier it aimed to increase the Vietnamese plant’s capitalization to US$3.5 billion from US$2.7 billion.
Formosa Petrochemical and Formosa Chemicals agreed last week to pour US$170 million each into the steel plant, while Nan Ya Plastics would contribute the remaining money.
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