Tue, Mar 12, 2019 - Page 11 News List

Formosa Petrochemical cuts dividend to NT$4.8

QUARTERLY LOSS:The company’s net profit last year declined 25.1 percent after a steep fall in oil prices in the final quarter negatively affected its product prices

By Chen Cheng-hui  /  Staff reporter

Formosa Petrochemical Corp (台塑石化), the oil refinery arm of Formosa Plastics Group (台塑集團), yesterday said its board of directors had approved a proposal to distribute a cash dividend of NT$4.8 per common share based on last year’s earnings per share of NT$6.3.

The proposed cash dividend, if approved by shareholders on May 31, would be the lowest in three years as the company, based in Yunlin County’s Mailiao (麥寮), saw its net profit last year decline 25.1 percent year-on-year to NT$60.06 billion (US$1.94 billion) after a steep fall in global oil prices in the final quarter negatively affected its product prices and inventory value, leading to its first quarterly loss of NT$4.18 billion in 17 quarters.

The proposed dividend represents a payout ratio of 76.19 percent, which is higher than the payout ratio of 74.82 percent the company offered the previous year when it distributed a NT$6.3 cash dividend based on 2017 earnings of per share of NT$8.42, company data showed.

With Formosa Petrochemical shares yesterday closing at NT$115 in Taipei, the proposed dividend of NT$4.8 translates to a dividend yield of 4.17 percent.

That is much higher than the average interest rate offered by the nation’s five major banks of between 1.04 percent and 1.07 percent for one-year to three-year fixed savings.

The other three major Formosa Plastics Group affiliates — Formosa Chemicals & Fibre Corp (台灣化纖), Nan Ya Plastics Corp (南亞塑膠) and Formosa Plastics Corp (台塑) — are due to announce their proposed dividends later this week and next week, with local media forecasting that the four major units would distribute more than NT$150 billion in dividends this year on the back of their combined earnings of NT$210.94 billion last year.

Formosa Petrochemical also said its board gave the green light to a plan to issue up to NT$12 billion in unsecured corporate bonds to repay debt and strengthen its working capital, according to a filing with the Taiwan Stock Exchange.

Formosa Petrochemical, Nan Ya Plastics and Formosa Chemicals & Fibre are also to invest a combined US$150 million on an ongoing expansion plan at the group’s US unit, FG Inc, a separate filing said.

The investment is to fund FG’s new ethane cracker in Louisiana, with US$85.5 million coming from Formosa Petrochemical, it said.

Formosa Petrochemical owns 57 percent Delaware-based FG, while Formosa Chemicals & Fibre owns 30 percent and Nan Ya Plastics 10 percent.

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