Fri, Jan 12, 2018 - Page 12 News List

Formosa Plastics posts high profits on product prices

PERKS OF THE JOB:Staff can expect bonuses equal to half a year’s salary because of the group’s strong earnings performance, a move that is expected to cost NT$7.5bn

By Kuo Chia-erh  /  Staff reporter

Four major units of Formosa Plastics Group (台塑集團), the nation’s largest industrial conglomerate, on Wednesday posted a 14.2 percent annual increase in their aggregate profit for last year, thanks to increasing product prices.

The group’s four listed members — Formosa Petrochemical Corp (台塑石化), Formosa Plastics Corp (台灣塑膠), Formosa Chemicals and Fibre Corp (台灣化學纖維) and Nan Ya Plastics Corp (南亞塑膠) — saw their combined net income reach NT$237.25 billion (US$8.01 billion) last year, with total sales increasing 13.2 percent to NT$1.5 trillion from the previous year.

Given its strong earnings performance, the group said it would give its about 30,000 employees year-end bonuses this year equal to six times their monthly salary.

The total bonus amount is expected to reach NT$7.5 billion, local media reported.

Formosa Chemicals, which supplies aromatics and styrenics, posted the highest earnings growth among the four, reporting that net profit surged 23.8 percent year-on-year to a record high of NT$54.26 billion, or earnings per share of NT$9.3, with sales up 12.3 percent to NT$358.42 billion.

The significant improvement of the company’s bottom line could be attributed to a broadening spread between revenue and material costs because of rising oil prices, Formosa Chemicals vice chairman Hong Fu-yuan (洪福源) said in a joint statement.

The price of acrylonitrile butadiene styrene and polycarbonate rose by US$400 and US$302 respectively last year from a year earlier, the statement said.

The other core units also reported that net profit grew last year thanks to rising global prices of their major products and better utilization rates.

The price of sodium hydroxide last year jumped by 35 percent from the previous year due to robust demand for aluminum oxide, especially from clients in the automotive and aerospace industries, Formosa Plastics chairman and president Jason Lin (林健男) said.

Formosa Plastics, the group’s flagship company, reported a 22.5 percent annual increase in net income last year to NT$48.26 billion, or earnings per share of NT$7.58, while revenue rose 14.7 percent annually to NT$206.71 billion.

Nan Ya, Taiwan’s largest plastics maker, saw its net profit climb 11.6 percent year-on-year to NT$54.52 billion, representing earnings per share of NT$6.87, with sales rising 11.2 percent to NT$306.14 billion.

Formosa Petrochemical, the nation’s only listed oil refiner, reported a net profit of NT$80.22 billion, representing a 5.9 percent year-on-year increase, with aggregate sales increasing 14.3 percent to NT$624.11 billion.

The group’s latest financial results beat market expectations, despite a relatively high comparison base in 2016, Yuanta Securities Investment Consulting Co (元大投顧) analyst Leo Lee (李侃奇) said in a client note on Wednesday.

The upward trend in global petrochemical prices is forecast to be maintained in the first half for this year, driving earnings growth of Formosa Plastics and Formosa Chemicals, Lee said.

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