Fri, Mar 07, 2014 - Page 13 News List

Falling prices hit Formosa Chemicals & Fibre revenue

By Camaron Kao  /  Staff reporter

Formosa Chemicals & Fibre Corp (台灣化學纖維) was the only company among the four main units of Formosa Plastics Group (FPG, 台塑集團) to report an annual decline in revenue last month due to falling prices.

The company, which produces aromatics and styrenics, posted revenue of NT$31.57 billion (US$1.04 billion), down 0.7 percent from NT$31.79 billion the previous year and 10.4 percent less than the NT$35.25 billion posted a month earlier.

“The lower product prices were caused by a lack of workers and funds at our downstream clients in China, a situation that was more serious than we expected,” Formosa Chemicals & Fibre president Hong Fu-yuan (洪福源) said at a press conference.

Hong said revenue is likely to post a sequential increase next quarter as demand picks up, but the company’s operating profit is not likely to be as good as last year because of lower product prices.

Compared with January, all four companies in the group — Formosa Chemicals & Fibre, Formosa Plastics Corp (台塑), Nan Ya Plastics Corp (南亞塑膠) and Formosa Petrochemical Corp (台塑石化) — reported a decline in sales last month due to fewer working days.

Formosa Plastics’ revenue was down 13.3 percent to NT$15.58 billion last month; Nan Ya Plastics’ sales fell 10.5 percent to NT$24.08 billion; and Formosa Petrochemical saw a monthly decline of 5.7 percent to NT$85.45 billion.

Meanwhile, Nanya Technology Corp (南亞科技), the nation’s biggest DRAM chipmaker, is likely to undergo a capital reduction this year, said company chairman Wu Chia-chau (吳嘉昭), who is also Nan Ya Plastics chairman.

Nan Ya Plastics is Nanya Technology’s largest shareholder with a 37.83 percent stake.

Wu said Nanya Technology directors would discuss the issue at a board meeting on Friday next week.

“We believe this year is a good time for the company to conduct a capital reduction,” Wu said.

Nanya Technology swung into the black last year with a profit of about NT$8 billion after reporting losses for five to six years, Wu said, adding that the outlook for the company is positive.

Wu said the supply for DRAM is not likely to rise significantly in the near future because no companies plan to build more factories making 12-inch wafer, and it is difficult to transfer flash-memory manufacturing into DRAM production.

He said Nanya Technology would focus on manufacturing DRAM for industrial use and more popular consumer products, minimizing the risks to the company’s sales.

The four Formosa Plastics Group units injected funds into Nanya Technology three times between 2011 and 2012 to prop up the latter’s capital at NT$240 billion, which is too much for the company, Wu said.

Conducting a capital reduction would allow the company to write off its accumulated losses and increase its earnings per share, he said.

Nanya Technology has accumulated losses of NT$200 billion, he added.

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