Formosa Petrochemical Corp (台塑石化) yesterday reported the largest drop in monthly revenue among the Formosa Plastics Group’s (台塑集團) four core companies, stock exchange filings showed.
The refiner said in the filing that its revenue last month fell 22.8 percent to NT$66.496 billion (US$2.21 billion) from April due to recent declines in global crude oil and ethylene prices, which have affected sales of its petrochemical products.
Meanwhile, weakening petrochemical demand from China also contributed to sales declining last month from NT$86.16 billion in April.
On an annual basis, Formosa Petrochemical’s revenue dropped 3.8 percent, the filing showed.
Formosa Petrochemical president Tsao Mihn (曹明) said that China consumption is slumping. While bank credit may be readily available in China, 40 percent of processing plants in the country are barely breaking even and 30 percent are in the red, while many companies are not borrowing because of fears they will not be able to repay the loans, he said.
Tsao worried that China had yet to bottom out and said that manufacturers were still cutting their inventories.
“The crisis this time around is a demand crisis, quite unlike 2008, when it was a financial crisis,” Tsao said.
In yesterday’s filings, Formosa Plastics Corp (台塑), the group’s flagship company, saw last month’s sales fall 6.7 percent month-on-month to NT$14.04 billion and 16.4 percent year-on-year, while Formosa Chemicals and Fibre Corp (台灣化纖) — which produces aromatics and styrenics — reported a 4.9 percent revenue drop to NT$25.05 billion from the previous month, but an increase of 3.6 percent from a year earlier.
Nan Ya Plastics Corp (南亞塑膠), the nation’s largest plastics maker, reported a sequential sales decline of 6.8 percent to NT$14.07 billion last month, a drop of 14.2 percent from one year ago, its filing showed.
Overall, the group’s four core companies posted a combined revenue of NT$119.66 billion last month, down 16.1 percent month-on-month. Revenues in the first five months of the year reached NT$666.96 billion, down 3 percent from a year earlier.
Additional reporting by CNA