Nan Ya Plastics Corp (南亞塑膠), a major unit of Formosa Plastics Group (台塑集團), yesterday gave a conservative outlook for the rest of this year, saying that customer demand for its electric materials might weaken due to an escalating US-China trade spat.
Oil prices and US-China tensions are the two big uncertainties for Nan Ya’s operations, chairman Wu Chia-chau (吳嘉昭) told reporters on the sidelines of an annual shareholders’ meeting in Taipei.
US President Donald Trump on Monday directed the US Trade Representative to identify US$200 billion worth of Chinese goods for additional tariffs of 10 percent, escalating tensions between the world’s two largest economies.
The latest development came after the US last week announced a 25 percent tariff on up to US$50 billion worth of Chinese goods, prompting Beijing to respond with a 25 percent tariff on US$34 billion of US products.
The trade spat would likely effect Nan Ya’s electric material products more than its other products, as the US’ latest tariffs are mostly related to high-tech industries, Wu said.
The US’ protectionist measures are targeting the “Made In China 2025” plan, considering the theft of intellectual property, he added.
Nevertheless, Nan Ya said it is upbeat about the sales of its petrochemical and plastics products, as global customer demand remains robust.
Global demand for ethylene glycol, one of Nan Ya’s benchmark products, is estimated to reach 28.44 million tonnes this year, up from last year’s 27.65 million tonnes, according to projections in the company’s annual report.
The company said it would continue investing in Taiwan, the US and China this year to lift production capacity of ethylene glycol and copper foil to meet rising demand worldwide.
The company has set a sales target of 2.35 million tonnes of ethylene glycol and 74,680 tonnes of copper foil this year, it said.
At the meeting, shareholders approved a proposal to distribute a cash dividend of NT$5.1 per share, based on net profit of NT$54.52 billion (US$1.8 billion) last year, or earnings per share of NT$6.87.
Profit last year rose 11.6 percent from NT$48.84 billion a year earlier, while sales over the same period rose 11.2 percent to NT$306.14 billion from NT$275.29 billion, supported by higher product prices.
The company partly attributed the performance to profits generated by its listed DRAM manufacturing unit, Nanya Technology Corp (南亞科技).
Nan Ya shares yesterday fell 2.13 percent to close at NT$82.8 before the shareholders’ meeting, underperforming the broader market, which lost 1.65 percent.
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