Formosa Plastics Group (台塑集團), the nation’s largest industrial conglomerate, yesterday said its earnings might inch up slightly in the fourth quarter as demand is anticipated to recover in China after the Oct. 1 holiday season.
The aggregate revenue of its four units — Formosa Plastics Corp (FPC, 台灣塑膠), 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) — totaled NT$110.10 billion (US$3.34 billion) last month, down 5 percent sequentially and 30.5 percent year-on-year, the companies said in a joint earnings conference.
“China’s economic slowing economic growth momentum, which has slid to a three-year low, combined with the yuan’s sudden sharp depreciation, has compelled many of our clients there to adopt a conservative stance on imports, as they wish to exhaust existing stock amid rising inventory pressure, but we expect the situation to improve in the fourth quarter,” FPC chairman Jason Lin (林健男) said.
FPC, the conglomerate’s flagship unit and the nation’s largest producer of polyvinyl chloride, reported that its revenues plunged 17.3 percent annually and 5 percent monthly to NT$15.09 billion last month.
The company attributed the decline in sales to falling Dubai crude oil, ethylene and propene prices, which slid by 53.1 percent, 39.2 percent and 41.5 percent year-on-year respectively, which had put further downward pressure on its prices.
Nan Ya Plastics Corp, the nation’s largest plastics maker, posted revenue of NT$24.06 billion last month, down by 18.1 percent year-on-year and 5.7 percent month-on-month, due to persistently high inventory levels for ethylene glycol in China and tumbling ethylene prices.
Formosa Chemicals & Fibre, which produces aromatics and styrenics, reported that its revenue fell by 25.1 percent annually and 7.6 percent monthly to NT$25.64 billion last month. The unit’s vice chairman Hong Fu-yuan (洪福源) said that based on precedents set in the past five years, the company’s sales usually rebound after September.
Formosa Petrochemical, the nation’s only private oil refiner, saw the most precipitous drop, due to declining crude prices. The unit’s sales last month tumbled 40.5 percent annually and 3.1 percent monthly to NT$46.31 billion.
Company president Tsao Mihn (曹明) attributed decline to global economic downturn, oversupply and market speculation.
He said that crude oil futures contracts currently outnumber actual global production.
At the end of yesterday’s session, FPC shares rose 0.15 percent to NT$68.4, Nan Ya shares remained flat at NT$57, Formosa Chemicals & Fibre Corp shares gained 0.75 percent to NT$67.1 and Formosa Petrochemical Corp dipped 1.5 percent to NT$72.2.
The TAIEX lost 0.18 percent.
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