Formosa Plastics Corp (台塑), the nation’s largest maker of polyvinyl chloride, yesterday said its board had approved a proposal to distribute a record-low NT$1.2 cash dividend per common share.
The company said its board also gave the green light to plans to issue up to NT$20 billion in unsecured corporate bonds to repay debt and to strengthen its working capital, according to various filings to the Taiwan Stock Exchange yesterday.
The company’s proposed cash dividend, if approved by shareholders on June 14, would be 70 percent lower than the NT$4 that it paid the previous year.
Based on last year’s earnings per share (EPS) of NT$2.4, the payout ratio is 50 percent. With the company’s shares closing at NT$71.9 yesterday, the proposed dividend represents a yield of 1.67 percent.
Formosa Plastics is the flagship company of Formosa Plastics Group (台塑集團), one of the nation’s leading industrial conglomerates. The company is the second major unit under the group to report a lower dividend on last year’s weak performance.
Affiliate Formosa Petrochemical Corp (台塑石化) on Thursday last week said its board approved a cash dividend of NT$0.26 per share, which is also a record-low for the nation’s only listed oil refiner and 87 percent less than the NT$2 it paid the previous year.
Based on last year’s EPS of NT$0.29, Formosa Petrochemical’s payout ratio is 89.66 percent, which Deutsche Bank said is similar to the previous year’s level.
“Although demand visibility remains unclear, Formosa Petrochemical maintains its high cash payout policy, rather than cash-on-hand policy to satisfy the cash flow demands of its major shareholders Formosa Plastics, Formosa Chemicals & Fibre and Nanya Plastics,” Deutsche Bank analyst Alden Lin (林炫承) said.
However, the company’s cash dividend yield is at a record-low of 0.33 percent, with its shares closing at NT$78.6 yesterday, due to its poor earnings and a costly share valuation last year, Lin said.