Formosa Plastics Group (FPG, 台塑集團) is to reduce its year-end bonus for employees due to weaker profits resulting from falling product prices, a source within the industrial conglomerate said yesterday.
FPG’s year-end bonuses are closely watched by the market, because they tend to set the benchmark for the private sector.
An executive who asked not to be named said that the group expects to issue year-end bonuses equivalent to 4.6 to 4.8 months of salary, down from 5.83 months of salary a year earlier, as the aggregate net profit of the group’s four major entities — 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) — plunged 46.9 percent in the first nine months of the year to NT$109.82 billion (US$3.64 billion).
The four subsidiaries’ sales were hurt by lower raw material prices amid a trade dispute between the US and China, which weakened demand, analysts said.
The source said that whether the year-end bonus would hit an equivalent of five months of salary would depend on the company’s fourth-quarter earnings, which it is scheduled to report early next month.
However, the target would not be easily attained based on current operations, the source said.
After the release of the fourth-quarter earnings report, executives would sit down with union representatives to discuss the year-end bonus, the source said.
FPG added a cash gift of NT$15,000 to the previous to the year-end bonus, but the group decided to scrap the gift after raising the ceiling for year-end bonuses to seven months of salary from six months, the source said.
However, the union might request that the cash gift be maintained this year because of the reduction to the year-end bonus, the source said.
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