The four major units of Formosa Plastics Group (FPG, 台塑集團) yesterday issued a dim outlook for this quarter after mounting trade tensions and tumbling oil prices took a toll on earnings in the final quarter of last year.
The four companies reported that net income last quarter dropped 94 percent sequentially to NT$4.8 billion (US$155.66 million), while net income the whole of last year fell 10.7 percent annually to NT$217.55 billion.
Revenue last quarter also dropped 5.6 percent sequentially to NT$417.64 billion, with the top line last year rising 16.3 percent annually to NT$1.5 trillion.
Formosa Petrochemical Corp (台塑石化), the group’s oil refinery arm, took the brunt of the impact, with its income during the October-to-December period falling 120.2 percent sequentially to NT$4.18 billion in the red — its first quarterly loss since the fourth quarter of 2014.
Brent crude prices last quarter fell from about US$86 per barrel to less than US$50, heavily affecting the company’s product prices and inventory value, Formosa Petrochemical president Tsao Minh (曹明) said.
Although the company’s aggregate top line last year rose 23 percent annually to NT$767.55 billion, the gain was unable to offset steep falls in its product prices, Tsao said.
Prices for its refined oil products also fell US$7.4 per barrel, while a drop in naphtha led to a US$151 per tonne reduction in alkene product prices, Tsao said.
The company last quarter booked NT$3.54 billion in inventory losses to reflect the loss in value of crude products and higher crude procurement costs in the third quarter, Tsao said, adding that there is a delay between the time when raw materials are purchased and refined products are sold.
The refiner’s earnings per share last quarter also fell to NT$0.44 from NT$2.17 in the period ending in September, and ended the year at NT$6.3 compared with NT$8.42 in 2017.
Last year marked the end of a four-year boom in the global petrochemical sector, and the company is bracing for further shocks, Tsao said.
“We are to increase investments in and adoption of artificial intelligence [AI] and Internet of Things [IoT] technologies to boost efficiency and improve industrial safety standards,” Tsao said.
“While there are many external variables, we will work on what is under our control,” he said, adding that AI would help in navigating the complexity of crude procurement, while IoT would help automate the most hazardous production processes.
Meanwhile, Formosa Plastics Corp (台灣塑膠) fared better than its peers last year, reporting a 0.2 percent annual rise in net income to NT$49.5 billion, while Nan Ya Plastics Corp (南亞塑膠) dipped 2.4 percent annually to NT$52.66 billion and Formosa Chemicals & Fibre Corp (台灣化學纖維) fell 7.8 percent annually to NT$55.36 billion.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is