Formosa Plastics Group (台塑集團), the nation’s largest industrial conglomerate, expects quarterly revenue at its four major units to grow slightly this quarter due to higher prices and shipments, but the business outlook for next quarter is bleak, executives from its major subsidiaries said yesterday.
Their comments came after the four units — Formosa Plastics Corp (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) — posted monthly growth of 5.9 percent in combined revenue of NT$141.78 billion (US$4.4 billion) last month.
In April, the four firms generated NT$108.39 billion in combined revenue.
However, their growth momentum is likely to be short-lived and business could weaken in upcoming months, mainly because of anticipated lower utilization rates due to scheduled maintenance, the executives said.
As some of the company’s plants are to gradually enter their annual maintenance period over the next three months, revenue is to decline sequentially next quarter, Formosa Plastics Corp (台灣塑膠) chairman and president Jason Lin (林健男) told a news conference.
“We have seven plants beginning maintenance from Aug. 24 to Sept. 6, matching our clients’ annual equipment maintenance plans, as demand is likely to dwindle during the period,” Lin said.
Overall factory utilization is expected to fall from this quarter’s 90 percent to 81 percent next quarter, Lin said.
Lin expects demand for petrochemical products to rebound in August or September, benefiting from inventory restocking demand for the Christmas holiday in Europe and seasonal demand from India.
Nan Ya Plastics chairman Wu Chia-chau (吳嘉昭) said he expects the company’s revenue to be flat next quarter from this quarter in a best-case scenario, amid lukewarm demand and a supply glut.
“Global electronics vendors have reduced orders [to our clients] after their sales slumped, which has caused excessive inventory at our domestic customers,” Wu said.
Polyester for electronics is the biggest revenue source for Nan Ya.
“We are conservative about the third quarter,” Formosa Chemicals president Hong Fu-yuan (洪福源) said. “Clients are taking a wait-and-see approach, as most factories are back to normal operations after a maintenance period and inventory remains high.”
If prices continue to drop, Formosa Chemicals’ revenue is forecast to slip next quarter, Hong said, adding that some of the company’s production lines are scheduled to begin maintenance next quarter.
The company hopes the industry’s peak season arrives in August to give a boost to its operations, Hong said.
Formosa Petrochemical president Tsao Mihn (曹明) was not upbeat about the company’s business next quarter, even though he expects Brent crude oil prices to remain at a high of between US$50 and US$55 per barrel at end of next quarter, compared with last month’s US$51 per barrel.
“Demand is a concern,” Tsao said.
The oil refiner is the biggest source of revenue for the industrial group.
Some of Formosa Petrochemical’s oil refinery equipment is also to be taken offline for maintenance, which is to drive down overall factory utlization from 94 percent to 84 percent, Tsao said.
PATENTS: MediaTek Inc said it would not comment on ongoing legal cases, but does not expect the legal action by Huawei to affect its business operations Smartphone integrated chips designer MediaTek Inc (聯發科) on Friday said that a lawsuit filed by Chinese smartphone brand Huawei Technologies Co (華為) over alleged patent infringements would have little impact on its operations. In an announcement posted on the Taiwan Stock Exchange, MediaTek said that it would not comment on an ongoing legal case. However, the company said that Huawei’s legal action would have little impact on its operations. MediaTek’s statement came after China-based PRIP Research said on Thursday that Huawei filed a lawsuit with a Chinese district court claiming that MediaTek infringed on its patents. The infringement mentioned in the lawsuit likely involved
Taipei is today suspending work, classes and its US$2.4 trillion stock market as Typhoon Gaemi approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed income trading, statements from its stock and currency exchanges said. Authorities had yesterday issued a warning that the storm could affect people on land and canceled some ship crossings and domestic flights. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) expects its local chipmaking fabs to maintain normal production, the company said in an e-mailed statement. The main chipmaker for Apple Inc and Nvidia Corp said it has activated routine typhoon alert
GROWTH: TSMC increased its projected revenue growth for this year to more than 25 percent, citing stronger-than-expected demand for AI devices and smartphones The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth this year from 3.29 percent to 3.85 percent, as exports and private investment recovered faster than it predicted three months ago. The Taipei-based think tank also expects that Taiwan would see a 8.19 percent increase in exports this year, better than the 7.55 percent it projected in April, as US technology giants spent more money on artificial intelligence (AI) infrastructure and development. “There will be more AI servers going forward, but it remains to be seen if the momentum would extend to personal computers, smartphones and
Catastrophic computer outages caused by a software update from one company have once again exposed the dangers of global technological dependence on a handful of players, experts said on Friday. A flawed update sent out by the little-known security firm CrowdStrike Holdings Inc brought airlines, TV stations and myriad other aspects of daily life to a standstill. The outages affected companies or individuals that use CrowdStrike on the Microsoft Inc’s Windows platform. When they applied the update, the incompatible software crashed computers into a frozen state known as the “blue screen of death.” “Today CrowdStrike has become a household name, but not in