FPG income surges on product pricing

By Ted Chen  /  Staff reporter

Sat, Oct 07, 2017 - Page 12

Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, yesterday reported that net income of its four major units surged 88.4 percent quarterly to NT$73.92 billion (US$2.43 billion) last quarter on the back of improving product prices.

Over the same period, combined sales of the four units — Formosa Petrochemical Corp (台塑石化), Formosa Plastics Corp (台灣塑膠), Formosa Chemicals and Fibre Corp (台灣化學纖維) and Nan Ya Plastics Corp (南亞塑膠) — rose 7.3 percent to NT$373 billion, the group said.

Among the four units, Formosa Chemicals registered the strongest growth, with its third-quarter net income rising 114.1 percent to NT$18.08 billion, or NT$3.1 per share, as rising oil prices boosted the company’s margins through higher end-product pricing.

Sales rose 7.3 percent quarterly to NT$88.2 billion, the company said.

However, Formosa Chemicals vice chairman Hong Fu-yuan (洪福源) said that its customers could become more hesitant in procurement, as product prices have peaked.

Delayed purchasing by customers could drag on the company’s sales in the final quarter of this year, Hong said.

Formosa Petrochemical, the nation’s only listed oil refiner, saw net income rise 84.7 percent to NT22.26 billion, with earnings per share of NT$2.34.

Sales rose 10.5 percent to NT$153.46 billion, the company said.

Gains over the previous quarter were supported by stable oil prices that inched up to US$50.40 per barrel, up from US$49.80 per barrel in the previous period, which drove up the company’s average product price by US$1.80 per barrel, the company said, adding that oil prices per barrel were US$12.3 higher than a year ago.

Formosa Petrochemical president Tsao Minh (曹明) said he expects oil prices to remain at about US$50 per barrel in the final quarter of this year, but added that ethylene and propene prices could dip on market corrections following recent gains.

Disruption left in the wake of Hurricane Harvey has also benefited the company, Tsao said, adding that the company’s rivals in Asia are facing supply constraints due to disruptions to US materials exports.

Although rising geopolitical tensions could diminish the production output by developing nations such as Venezuela and Libya, oversupply concerns from US shale oil and poor adherence of output reduction agreements among oil-producing nations remains, Tsao said.

Nan Ya Plastics, the nation’s largest plastics maker, reported that net income gained 84.4 percent to NT$166.66 billion, with earnings per share of NT$2.1, while sales rose 5.1 percent from the previous quarter to NT$77.86 billion, driven by the peak season for electronic product shipments.

Nan Ya Plastics said that its inventory level has seen marked reduction as of the end of last month, while inventory stockpiles have returned to a stable 525,000 tonnes at ports throughout eastern China.

Formosa Plastics Corp, the nation’s largest producer of polyvinyl chloride, reported that net income last quarter rose 74.3 percent to NT$16.93 billion, or NT$2.66 per share, while sales rose 2.1 percent to NT$53.48 billion over the period.

The company said it expects earnings for this quarter to outperform the previous period thanks to the favorable manufacturing activities across the world’s major markets, as well as rising demand from India as the country’s monsoon season ends, while its Chinese rivals are increasingly strained by Beijing’s crackdown on industrial pollution.