Formosa Plastics Corp (FPC, 台塑), the nation’s largest producer of polyvinyl chloride, expects sales this year to continue increasing on the back of a rising contribution from its US subsidiary.
Last year, Formosa Plastics Corp USA, 22.59 percent owned by the Taiwanese company, reported a net profit of US$1.05 billion, the highest in its history, after its margins were boosted by the use of cheap shale gas in making petrochemical products.
“We can increase the use of cheap shale gas by our US subsidiary this year after its second factory became operational in April,” FPC chairman Lee Chih-tsuen (李志村) said at the company’s shareholders’ meeting yesterday.
“Profits for the US company are set to reach a new high this year,” Lee added.
The company plans to spend US$2 billion on expansion plans at its US subsidiary, which are scheduled to be completed by 2016.
The parent company’s performance is also likely to improve this year because of an improved global economic outlook, Lee said.
“Many European countries have decided to ease back on austerity measures and instead focus on economic growth, which will benefit Taiwan since 66 percent of the nation’s GDP depends on exports,” Lee said.
However, tariffs remain a burden on the local plastics industry and the government should conduct talks with China to reduce tariffs, he said.
Many ASEAN nations have seen their plastic products exports to China increase over the past two years, while Taiwan’s exports to China have dwindled, Lee said, citing a free-trade agreement between China and ASEAN countries.
FPC shareholders yesterday agreed to the company’s plan to distribute a cash dividend of NT$1.2 and a stock dividend of 0.4 percent, based on last year’s earnings of NT$14.66 billion (US$490 million), or NT$2.4 per share, the lowest level in 10 years.
Shareholders also agreed to the company’s plan to issue 244.84 million new common shares, enabling the company to use proceeds to improve its capital structure and expand capacity.
Formosa Plastics also agreed to raise its employees’ salaries by 2.5 percent, with an additional NT$3,000 bonus per employee.
Formosa Plastics shares rose 0.15 percent to NT$68.6 yesterday, outperforming the TAIEX, which was down 0.18 percent.