Mon, Jul 14, 2014 - Page 13 News List

Formosa Chemicals expects profits to be up this quarter

By Camaron Kao  /  Staff reporter

Formosa Chemicals & Fibre Corp (台灣化學纖維), which produces aromatics and styrenics, on Thursday said that it expected its operating profit this quarter to be higher than the NT$2.43 billion (US$80.93 million) it posted last quarter on the back of higher prices for paraxylene and purified terephthalic acid.

Last quarter, the company’s operating profit rose 43.7 percent from the NT$1.69 billion of the previous quarter, because manufacturers of purified terephthalic acid in China reduced their use and production of the product, driving the price up, Hong Fu-yuan (洪福源), general manager of the company, told reporters on Thursday.

“Chinese companies would have incurred greater losses if they had continued to make so much purified terephthalic acid,” Hong said. “We believe their production level should remain the same this quarter, meaning the price of purified terephthalic acid should stay at around US$1,000 per tonne, up from US$800 per tonne at the beginning of the year.”

Sales of purified terephthalic acid accounted for 9.84 percent of the company’s revenue last year, according to Formosa Chemicals.

Meanwhile, although the price for paraxylene dropped to US$1,350 per tonne recently from US$1,500 earlier this month, Hong said the price should not decline any further this quarter because the margin for many producers was thin.

The price was higher than US$1,100 per tonne at beginning of the year, Hong said.

Sales of paraxylene accounted for 18.37 percent of the Formosa Chemicals’ revenue last year, according to the company.

Formosa Chemicals’ net profit was NT$3.48 billion last quarter, or NT$0.6 per share.

The company said its gross margin last quarter was higher than the 4.92 percent in the previous quarter, and its gross margin for this quarter would be even higher.

However, Hong said he expected revenue this quarter would decrease sequentially from the NT$110.82 million it posted last quarter, as its factory for making polycarbonate resin would conduct annual maintenance next month, a factory for making styrene monomer would start annual maintenance on Sept. 1, and its third plant for making paraxylene and benzene would also be shut down for maintenance between Sept. 15 and Oct. 29.

Jih Sun Securities Investment Consulting Co (日盛投顧) forecast that the company would register profits of NT$5.72 billion this quarter, up 64.36 percent from NT$3.48 billion last quarter, while its revenue would be NT$104.78 billion this quarter, down 5.45 percent from last quarter, according to its report issued on Friday.

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