Three main units of Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, yesterday reported month-on-month revenue declines due to their clients waiting for oil prices to go down.
Formosa Chemicals & Fibre Corp (台灣化學纖維), which produces aromatics and styrenics, registered revenue of NT$29.43 billion (US$962 million) last month, down 2.2 percent from NT$30.11 billion the previous month and 17.5 percent from NT$35.68 billion the previous year, according to a company filing to the Taiwan Stock Exchange.
The result was contrary to the company’s previous forecast a month earlier that it would report a month-on-month revenue increase, it said.
“The declining oil price dampened market sentiment for our products as our clients were waiting for prices to go down, which we did not forecast,” Formosa Chemicals & Fibre general manager Hong Fu-yuan (洪福源) said at a press conference yesterday.
Hong said the company’s revenue would rise this month from a month earlier and its revenue next month would be flat if oil prices did not fall further.
Hong said the company’s profit this quarter might be affected by losses from excess inventories, but if its product prices stop declining, the losses could be written off in the future.
Formosa Plastics Corp (FPC, 台塑), the nation’s largest producer of polyvinyl chloride, also revised its forecast, saying that it would see quarter-on-quarter revenue decline this quarter from a quarter ago. It initially predicted an increase in revenue.
As the West Texas Intermediate price for oil dropped US$10 per barrel last month, prices for ethylene and propylene, raw materials the company uses, also dropped, FPC president Jason Lin (林健男) said yesterday.
As a result, downstream customers reduced their purchases to wait for prices to go down, Lin said.
The utilization rate for the company would drop to 87 percent this quarter, down from the 93 percent it previously forecast, the company said.
However, FPC is likely to register the highest profit among the group’s four main units, as its inventory level is the lowest, making it suffer less inventory losses when product prices go down, it said.
FPC reported revenue of NT$17.04 billion last month, down 0.7 percent from NT$17.15 billion the previous month and down 2.9 percent from NT$17.56 billion the previous year, according to a company filing to the Taiwan Stock Exchange.
Nan Ya Plastics Corp (南亞塑膠), the nation’s largest plastics maker, posted revenue of NT$26.21 billion last month, down 3.2 percent from NT$27.09 billion the previous month and 1.2 percent from NT$26.53 billion a year earlier, according to a company filing to the Taiwan Stock Exchange.
Formosa Petrochemical Corp (FPCC, 台塑石化), the nation’s only listed oil refiner, reported that revenue increased by 11.3 percent to NT$76.97 billion last month from NT$69.17 billion the previous month, its filing said.
The figure last month was up 0.1 percent from NT$76.86 billion the previous year, FPCC said.
The month-on-month revenue increase was because the company sold 18.54 million barrels of oil last month, up 2.71 million barrels from the previous month, FPCC president Tsao Minh (曹明) said.
The utilization rate for its olefin business also increased to 94 percent last month from 65 percent a month earlier, when one of its olefin factories was undergoing annual maintenance, Tsao said.
Tsao said the company would post losses last month and this month because of tumbling oil prices, while it will swing back into the black next month.
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