Share prices of the major units of Formosa Plastics Group (台塑集團) continued to fall yesterday as investors remained conservative about the units’ profit outlook in the wake of disappointing results for last quarter released this week.
Formosa Plastics Group is the nation’s largest industrial conglomerate and its four principal units are Formosa Plastics Corp (台塑), Formosa Petrochemical Corp (台塑石化), Nan Ya Plastics Corp (南亞塑膠) and Formosa Chemicals & Fibre Corp (台灣化學纖維).
But the four units' combined earnings for last quarter were the worst-ever since the fourth quarter of 2008, mainly dragged by the poor refining operation at Formosa Petrochemical.
In Taipei trading yesterday, share prices in Formosa Plastics Corp, Formosa Petrochemical and Nan Ya Plastics dropped more than 1 percent, underperforming the TAIEX’s 0.56 percent retreat, while Formosa Chemicals sustained a technical rebound of 0.61 percent, according to data from the Taiwan Stock Exchange.
On Monday, the group reported worse-than-expected losses at Formosa Petrochemical, which is the nation’s only listed oil refiner, and at Formosa Chemicals, a producer of aromatics and styrenics.
JPMorgan Securities Ltd said Formosa Petrochemical, which posted losses of NT$13.08 billion (US$411.2 million) during the October-to-December quarter, might incur more inventory losses this quarter with Dubai oil down another 18 percent since the end of last year.
The fast-falling crude oil prices around the world also took a toll on Formosa Chemicals and Formosa Plastics Corp, which recorded losses of NT$6.47 billion and NT$540 million respectively last quarter.
Nan Ya Plastics, however, managed to post net profit of NT$2.99 billion in the last quarter, according to the company’s stock exchange filing on Monday.
UBS Securities in a separate note echoed the cautious sentiment toward the group’s major units, saying that crude oil prices may continue to weigh on their business prospects going forward.
Local media on Tuesday quoted the group’s management as having said that they were conservative about market fundamentals in the near term, but expected the overall market to stabilize from the second quarter on.
Petrochemical inventories are at low levels, but restocking demand could emerge after the Lunar New Year holiday given the diminishing downside risk of crude oil prices, local media said, citing the group.
Low crude oil prices should also help stimulate demand and lead to better competitiveness with lower feedstock costs, local media added.
For the whole of last year, Formosa Plastics Corp reported net profit of NT$17.96 billion, or earnings per share of NT$2.82.
Nan Ya Plastics reported the highest profit among the four firms for last year at NT$31.73 billion, or NT$4 per share.
Formosa Petrochemical posted net profit for last year at NT$8.99 billion, or NT$0.94 per share, and Formosa Chemicals earned NT$10.12 billion last year, or earnings per share of NT$1.73.
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