Plastics manufacturer Taita Chemical Co Ltd (TTC, 台達化) suspended its loss-making Tianjin unit in China last month as the lingering US-China trade dispute eroded demand for home appliances there, the company said yesterday.
“We temporarily halted operations at our Tianjin factory, as it had been posting net losses in the past few years,” Taita Chemical vice president Yen Tai-ming (顏太明) told an investors’ conference in Taipei.
The suspension is expected to limit the Tianjin unit’s losses to NT$9.11 million (US$289,666) per quarter, Taita accounting manager Lin Chin-tsai (林金才) said.
The unit posted annual net losses averaging NT$91.1 million in recent years, Lin said.
Established in 2005, the unit contributed NT$286 million, or 6 percent, to the company’s first-quarter sales. Last year, the factory had an annual output of 30,000 tonnes of expanded polystyrene, company data showed.
“We would see how the market reacts in the following quarters and if we need to resume operations at the factory later,” Taita Chemical president Wu Pei-chi (吳培基) said.
Expanded polystyrene contributed 49 percent to the company’s sales last quarter, while acrylonitrile butadiene styrene (ABS), which is used in making home appliances and auto parts, accounted for 30 percent. General polystyrene (GPS), used for making electronics and appliance casings, contributed 18 percent, while glass wool and cubic printing made up the remaining 3 percent. Cumulative revenue in the first four months of the year declined by 8.55 percent to NT$6.19 billion, compared with NT$6.77 billion a year earlier, the company said.
The US-China trade dispute is expected to negatively affect the home appliance business in China after Washington raised tariffs from 10 to 25 percent on Chinese goods earlier this month, which would have repercussions for Taita Chemical, it said.
However, the company said it remains positive about the Chinese market in the long run, given rising demand for styrene monomer (SM) and general polystyrene, as well as plans to increase its ABS output by 200,000 tonnes this year and 600,000 tonnes in the next two years, it said.
The company last year produced 4.06 million tonnes of ABS and 9.25 million tonnes of SM, the data showed.
Taita Chemical’s net income climbed 2.94 percent to NT$195.22 million in the first quarter, up from NT$189.65 million a year earlier, while earnings per share slightly increased from NT$0.58 to NT$0.60 and gross margin rose 0.8 percentage points to 8.55 percent.
The company attributed the increase to better-than-expected sales of ABS and GPS.
Taita Chemical shares yesterday closed up 0.45 percent at NT$11.25 in Taipei.
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