Fri, Jun 15, 2018 - Page 12 News List

Formosa Petrochemical expects oil prices to drop

STRONG EARNINGS:The company’s net profit for last year hit a record high, which it partly attributed to a decrease in supply from its Asian competitors

By Kuo Chia-erh  /  Staff reporter

Formosa Petrochemical Corp (台塑石化) yesterday said crude oil prices are expected to decline until the end this year, as global demand might weaken amid growing uncertainty over the US’ trade policy.

“We expect Brent crude prices to decrease from the current level of nearly US$75 per barrel during next quarter and the fourth quarter,” Formosa Petrochemical chairman Chen Bao-lang (陳寶郎) told reporters after the company’s annual shareholders’ meeting in Taipei.

Despite a decreasing supply from Venezuela and Iran, Brent crude prices would likely start to fall over the next two quarters, as the US government’s policy has sparked growing protectionism around the world, affecting oil demand, he said.

“Brent prices might fall to US$70 per barrel next quarter and US$66 in the fourth quarter,” Chen said, citing the company’s latest estimate.

At the meeting, shareholders approved a company proposal to distribute cash dividends of NT$6.3 per share, a 10-year high, based on last year’s earnings per share of NT$8.42.

That translates into a dividend yield of 5.27 percent, based on Formosa Petrochemical’s closing price of NT$119.5 yesterday.

The company posted sales of NT$624.11 billion (US$21.18 billion) last year, up 14 percent from NT$546.16 billion in 2016, while net profit rose 5.82 percent to a record high of NT$80.17 billion from NT$75.76 billion in 2016, company data showed.

Formosa Petrochemical attributed the strong earnings performance to a broadening spread between revenue and material costs because of rising oil prices, as well as falling supply from its Asian competitors.

The company said it would continue pouring resources into the research and development of high-value-added products in petrochemical supply chains this year to improve its product portfolio.

It said it has been testing hydrogenated styrene block copolymer products in a venture with US-headquartered Kraton Performance Polymers Inc since February last year.

A project with Japan’s Idemitsu Kosan Co Ltd is scheduled to become operational next year, producing an expected annual capacity of 43,800 tonnes of hydrogenated hydrocarbon resins, it said.

Formosa Petrochemical expects its gasoline and diesel sales to reach 5.97 billion liters and 10.52 billion liters respectively this year, with its plants operating at full capacity, its annual report showed.

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