FPG says trade war could dampen growth prospects

By Ted Chen  /  Staff reporter

Fri, Sep 07, 2018 - Page 12

Formosa Plastics Group (FPG, 台塑集團) yesterday voiced concerns about looming uncertainties, including an escalating US-China trade war, which could dim prospects during the high season in the fourth quarter.

While the conglomerate’s four major units would be entering the fourth quarter with higher capacity utilization as of the end of last month following the conclusion of annual maintenance checks, confidence among its customers has been rocked by the trade war, executives said at the group’s monthly news conference in Taipei.

The four units reported that combined sales last month rose 7.4 percent sequentially and 21.9 percent annually to NT$155.73 billion (US$5.06 billion), while aggregate sales in the first eight months gained 19.6 percent year-on-year to NT$1.16 trillion.

Formosa Petrochemical Corp (台塑石化), the group’s oil refinery arm, posted the fastest growth in sales last month, which rose 30.8 percent annually to NT$69.87 billion.

Sales growth in the final quarter would depend on crude oil prices and inventory levels, which would be influenced by the outcome of the US-China trade war, Formosa Petrochemical president Tsao Minh (曹明) said.

In second place was Formosa Chemicals & Fibre Corp (台灣化學纖維), which said sales last month rose 23.9 percent annually to NT$36.4 billion.

Formosa Chemicals & Fibre president Hong Fu-yuan (洪福源) said the company is concerned about demand growth in China as the nation’s economic growth tapers.

It has yet to see a surge in orders from Chinese customers who typically ramp up inventory in preparation for the Nov. 11 “Singles Day” shopping event, he said.

Still, despite this year’s lukewarm peak season showing, inelastic demand for the company’s products has remained stable, Hong said.

Nan Ya Plastics Corp (南亞塑膠) reported that sales last month gained 14.1 percent annually to NT$29.66 billion, but chairman Wu Chia-chau (吳嘉昭) gave a muted sales growth forecast for next quarter.

Formosa Plastics Corp (台塑) saw sales last month rise 14.6 percent to NT$19.8 billion, and company chairman Jason Lin (林健男) said the firm has been allocating inventory to Vietnam, Bangladesh and Indonesia to cater to possible adjustments made by its Chinese customers to cope with the trade war.

The company remains hesitant about investing in production facilities in Southeast Asian markets due to growing concerns about foreign exchange volatility, Lin said.