Wed, May 07, 2014 - Page 13 News List

Formosa Chemicals lowers its sales outlook for quarter

By Camaron Kao  /  Staff reporter

Formosa Chemicals & Fibre Corp (台灣化學纖維), which produces aromatics and styrenics, yesterday adjusted downward its sales outlook for this quarter, citing lower-than-expected product prices.

The company expects its revenue this quarter would remain flat, at the NT$101.35 billion (US$3.37 billion) it recorded a quarter ago. Last month, the company said quarterly revenue would post sequential growth from last quarter.

“We can still secure more orders from our clients, but product prices are hovering at a low level,” company president Hong Fu-yuan (洪福源) said at a press conference.

Hong said HSBC’s China purchasing managers index (PMI) for the manufacturing sector last month, which rose only 0.1 points to 48.1 points from March, poses headwinds for its business this quarter, even though the second quarter is a traditionally strong season for the sector in China.

PRODUCTION

According to Hong, the production capacity of purified terephthalic acid would rise 21.95 percent to 2.5 million tonnes this month in China, from 2.05 million tonnes last month, while the demand in China this month would be only 2.45 million tonnes.

Production of paraxylene is also expected to increase by 5 million tonnes in South Korea, causing the price of paraxylene to remain low in the region, Hong said.

As a result, Formosa Chemicals & Fibre’s profit this quarter is likely to post a sequential decline from NT$5.67 billion a quarter ago because of a lower margin, he said.

The company registered revenue of NT$36.95 billion last month, up 7 percent from NT$34.53 billion a month earlier and up 2.8 percent from NT$35.93 billion a year ago, according to the company’s filing to the Taiwan Stock Exchange.

Hong said the revenue increase was because of rising sales volume last month from a month ago and a year ago, despite lower product prices.

Meanwhile, Formosa Plastics Corp (台塑), the nation’s largest producer of polyvinyl chloride, is bullish about this quarter because the Indian government imposed an antidumping tax upon its competitors in that country.

Company president Jason Lin (林健男) yesterday said the Indian government’s decision on April 7 to raise tariffs on companies selling polyvinyl chloride from China, Thailand, the US, Europe and Mexico — to between US$30 per tonne and US$190 per tonne, from under US$45 per tonne — would open up a demand gap of 330,000 tonnes a year in India.

As a result, the company’s revenue this quarter would be higher than a quarter ago, Lin said.

Formosa Plastics reported revenue of NT$19.73 billion, up 7 percent from NT$18.44 billion a month ago and up 9.9 percent from NT$17.94 billion a year ago.

NAN YA PLASTICS

Separately, Nan Ya Plastics Corp (南亞塑膠), the nation’s largest plastics maker, reported revenue of NT$27.58 billion last month, up 4.2 percent from NT$26.48 billion a month ago and 10.1 percent from NT$25.06 billion the previous year.

However, Formosa Petrochemical Corp (台塑石化), the nation’s only listed oil refiner, reported a revenue decline of 15.9 percent to NT$73.43 billion last month, from NT$87.34 billion a month ago, according to a filing. The figure was up 7.2 percent from NT$68.53 billion the previous year, the filing said.

Overall, the combined revenue generated from these four major units of Formosa Plastics Group declined 5.5 percent month-on-month but increased 6.9 percent year-on-year to NT$157.69 billion last month.

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