Formosa Petrochemical Corp (台塑石化) registered the largest drop in monthly revenue among the Formosa Plastics Group’s (台塑集團) four core companies, according to data released by the group yesterday .
The refiner’s revenue last month fell 20.1 percent to NT$53.16 billion (US$1.8 billion) from May due to the recent decline in prices of global crude oil and olefin products, which in turn drove down the prices of oil and petrochemical products, company president Tsao Mihn (曹明) said at a press conference.
Facility maintenance and a power outage on June 20 also resulted in a lower output from its refinery operations and caused sales of olefin products to drop, Tsao said.
On an annual basis, Formosa Petrochemical’s revenue last month dropped 16.1 percent, data showed.
Cumulative revenue in the second quarter fell 10.4 percent sequentially to NT$205.81 billion, while revenue in the first six months of the year dropped 0.5 percent to NT$435.63 billion from a year ago, data showed.
Formosa Plastics Corp (台塑), the group’s flagship company, also reported a drop in revenue last month, sliding 12 percent from May and 10.7 percent from a year ago to NT$12.35 billion.
Second-quarter revenue fell 12.5 percent from the first quarter to NT$41.43 billion, while sales in the first six months dipped 12.1 percent from a year ago to NT$88.77 billion.
Formosa Plastics president Jason Lin (林健男) attributed the revenue decline to the falling prices of petrochemical products such as polyvinyl chloride (PVC), polyethylene (PE) and polypropylene (PP).
Nan Ya Plastics Corp (南亞塑膠), the nation’s largest plastics manufacturer, bucked the trend by reporting a sequential sales increase of 3.5 percent to NT$14.56 billion last month and a gain of 24.6 percent from a year ago, data showed.
Nan Ya was the only one among the four to post growth last month, while the rest recorded double-digit declines month-on-month.
Nan Ya attributed the growth to orders for glycol that were deferred from May to last month because of shipping schedule problems. Sales of the company’s plastic products, electronic materials and fiber products all fell last month from May, it said.
Second-quarter revenue dropped 8.9 percent to NT$43.71 billion from the first quarter, while revenue in the first six months declined 13.4 percent to NT$91.66 billion from a year earlier, data showed.
The company said sales plummeted because of falling prices and slower demand as oil prices dropped due to a gloomy global economic climate.
Meanwhile, Formosa Chemicals & Fibre Corp (台灣化纖), which produces aromatics and styrenics, reported a 17.8 percent drop in revenue to NT$20.6 billion from the previous month, and a decline of 3.1 percent from a year earlier.
Second-quarter revenue dropped 9.5 percent to NT$72.02 billion from the first quarter, while revenue in the first six months declined 0.9 percent to NT$151.57 billion from a year earlier.
Overall, the four core companies posted combined revenues of NT$100.67 billion last month, down 15.9 percent from May. For the first half of the year, their total revenues reached NT$767.63 billion, down 3.7 percent from a year earlier.
In terms of pre-tax profit during the first half of the year, Nan Ya Plastics incurred a loss per share of NT$0.13, Formosa Chemicals & Fibre reported a loss per share of NT$0.44, and Formosa Petrochemical posted a loss per share of NT$1.13, while Formosa Plastics was the only company among the four to report a profit for the six-month period, with earnings per share of NT$0.93.
The managers of all four companies gave a very conservative outlook for the third quarter, saying they expected either flat or moderate growth.
For Formosa Plastics, Lin said customers were stocking petrochemical products such as PVC and PE, but the demand for chemical products was still declining.
Formosa Chemicals and Fibre president Hong Fu-yuan (洪福源) was cautious, saying that given a weak economic outlook, prospects would depend on downstream demand.
Tsao said Formosa Petrochemical’s outlook in the third quarter would depend on crude oil prices, which are forecast to go up. That could help the company post slight growth.
This story has been updated since it was first published.
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