Formosa Plastics Corp (FPC, 台塑公司), Formosa Plastics Group’s (FPG, 台塑集團) flagship unit, yesterday reported a 32.91 percent decline in operating profit from a quarter ago, as profit margins on polyvinyl chloride decreased.
The company, the nation’s largest producer of polyvinyl chloride, posted an operating profit of NT$858.75 million (NT$29.01 million) during the July-to-September quarter, down from NT$1.28 billion the previous quarter, according to a company filing to the Taiwan Stock Exchange.
That figure was an increase of 40.38 percent from the NT$611.72 million posted a year ago when the company was required to shut down some of its factories to improve the safety conditions, a company official, who declined to be named, said by telephone yesterday.
“The gross margin of some of our other products was lower than a quarter ago, affected by weaker market demand,” he said.
Sales of polyvinyl chloride accounted for 20 percent of Formosa Plastics’ NT$196.88 billion revenue last year, company data showed.
In addition, the company’s utilization rate also declined to below 80 percent in September from above 90 percent in the second quarter as Formosa Petrochemical Corp’s (台塑石化) olefins plant was under maintenance, decreasing the availability of raw materials for Formosa Plastics’ products, the official said.
Formosa Petrochemical is another main unit of the group.
Formosa Plastics posted a profit of NT$6.48 billion last quarter, down 20.49 percent from NT$8.15 billion a year ago and up 109.03 percent from 3.1 billion a quarter ago, the filing said.
The year-on-year decline was caused by lower dividend income generated from Nan Ya Plastics Corp (南亞塑膠) and Formosa Chemicals & Fibre Corp (台灣化纖), the two other main units of the group, while the quarter-on-quarter increase was caused by higher non-operating income from Formosa Petrochemical as a result of higher oil prices, the official said.
However, the company booked a non-operating income of between NT$1.5 billion and NT$1.7 billon last quarter from Formosa Plastics Corp USA, which is 22.59 percent owned by the Taiwanese company, the official said, adding that the amount was 30 percent higher than the amount company posted a year ago.
Formosa Plastics booked a non-operating profit of about NT$4.8 billion from its US division during the first three quarters of the year, similar to the amount gained from the division throughout last year, he said.
The official said prices for ethylene vinyl acetate, which accounts for 7 percent of its sales, have increased since September, indicating a positive outlook for this quarter.
Formosa Plastics shares rose 1.32 percent yesterday, outperforming the TAIEX, which was up 0.16 percent.