Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, is likely to give employees year-end bonuses equivalent to six months’ salary, FPG chairman William Wong (王文淵) said on Saturday.
As FPG’s bottom line was good in the first three quarters, the group might maintain its policy for Lunar New Year bonuses, Wong said.
In addition, FPG would be giving out red envelopes to employees to express its gratitude for their hard work, he said.
“The amount of cash in the red envelopes has not yet been decided,” Wong said at the group’s annual sports day.
The four major units of FPG — Formosa Plastics Corp (台塑), Nan Ya Plastics Corp (南亞塑膠), Formosa Chemicals & Fibre Corp (台灣化學纖維) and Formosa Petrochemical Corp (台塑石化) — posted a combined net profit of NT$206.8 billion (US$6.71 billion) in the first nine months of the year, up 22.9 percent from a year earlier, largely on rising product prices due to higher international crude oil prices.
Formosa Petrochemical, the second-biggest company by market capitalization on the Taiwan Stock Exchange, had the highest net profit among the four at NT$64.2 billion, a 12.8 percent increase from a year earlier, with earnings per share of NT$6.74.
Despite the units’ strong earnings in the first nine months, Wong said he is cautious about the fourth quarter and beyond, because of the trade tensions between the US and China.
“With no signs that either side will back down or that they will resolve the trade dispute soon, we have to prepare ourselves for challenges posed by trade issues,” he said.
FPG plants in China sell most of their products there, but some are shipped to the US, Wong said.
He said the group would keep a close eye on an expected meeting between US President Donald Trump and Chinese President Xi Jinping (習近平) at the G20 summit in Argentina this month.
The units on Monday last week reported top-line figures for last month, with Formosa Plastics the only firm to post a monthly growth in revenue, up 8.9 percent to NT$19.69 billion. Its revenue increased 18.7 percent from a year earlier.
In the same month, Nan Ya’s revenue declined 3.8 percent month-on-month, but rose 5.6 percent year-on-year to NT$27.51 billion.
Formosa Chemicals saw revenue drop 2.4 percent from the previous month to NT$36.07 billion, but the figure was up 13.9 percent from a year ago, while Formosa Petrochemical’s revenue fell 0.4 percent monthly, but expanded 30.2 percent annually to NT$68.26 billion.
Due to concerns over trade tensions and a possible cap on oil price hikes, the four units’ earnings this quarter are forecast to decline from peaks last quarter, despite higher sales and production volumes after completing maintenance, Capital Investment Management Corp (群益投顧) said.
“As downstream demand and oil price support have weakened recently, the prices of petrochemical products [are expected to] decline mostly,” Capital Investment said in a note on Tuesday last week.
“Furthermore, the gradual addition of ethane-based ethylene capacity in the US may weigh on the prices of ethylene and its downstream products in Asia,” Capital Investment said. “Coupled with a lack of non-operating cash dividends, fourth-quarter net profits of FPG’s four major companies might decrease quarter-on-quarter.”
Additional reporting by Chen Cheng-hui
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