Formosa Plastics Group (台塑集團), the nation’s largest industrial conglomerate, yesterday posted a 32 percent annual decline in net profit for last quarter, after global crude oil prices plunged.
Total net profit totaled NT$39.22 billion (US$1.28 billion) for the April to June period, which translated to a 28.8 percent decrease from the previous quarter, data showed.
Three main units of the group reported annual declines in net profit last quarter, according to separate company filings with the Taiwan Stock Exchange.
Formosa Petrochemical Corp (台塑石化) — the nation’s only listed oil refiner — led the decline, announcing that its net profit had plunged 53.3 percent year-on-year, or 46.7 percent quarter-on-quarter, to NT$12.05 billion. Earnings per share sank to NT$1.27.
Lower prices for the company’s major products also weighed on the earnings performance last quarter, Formosa Petrochemical president Tsao Minh (曹明) told an earnings conference in Taipei yesterday.
The average selling price of olefins dropped 14.6 percent to US$753 per tonne last quarter from US$882 per tonne in the previous quarter, Tsao said.
Formosa Petrochemical offered a conservative outlook for its profitability and global crude prices in the second half of the year.
The US Federal Reserve’s decision to raise key interest rates, if it happens, would curb the rebound of global crude oil prices in the third and fourth quarters, Tsao said.
The company is prone to the volatility of oil prices, he added.
Formosa Plastics Corp (台塑), the nation’s largest producer of polyvinyl chloride and the group’s flagship, posted a net profit of NT$9.71 billion, or earnings per share of NT$1.53, down 4.8 percent from the previous year, and 1.8 percent from the previous quarter respectively.
Formosa Chemicals & Fibre Corp (台灣化學纖維), which produces aromatics and styrenics, reported a net profit of NT$8.43 billion, or earnings per share of NT$1.45, representing a 36.6 percent decline from a year earlier and a 28.1 percent decline from a quarter earlier.
Bucking the downward trend, Nan Ya Plastics Corp (南亞塑膠) was the only unit of the group to report an annual increase in net profit for last quarter, attributed to improving customer demand and profits generated by its subsidiary Nanya Technology Corp (南亞科技), the nation’s biggest DRAM chip supplier.
Nan Ya, the nation’s largest plastics maker, saw its net profit increase 8 percent annually to NT$9.03 billion, or earnings per share of NT$1.14, but decline 16.9 percent quarter-on-quarter, company data showed.
Despite the sluggish performance last quarter, Formosa Plastics and Nan Ya yesterday provided relatively positive outlooks for the current quarter amid improving customer demand.
“Customer demand for ethylene vinyl acetate [EVA] and polyvinyl chloride [PVC] is usually higher in the third quarter,” Formosa Plastics chairman Jason Lin (林健男) said.
Nan Ya chairman Wu Chia-chau (吳嘉昭) echoed Lin’s remarks, saying that the demand for electric material and ethylene glycol (EG) is expected to grow further in the coming quarters.
The group saw its overall profits increase 9.7 percent annually to NT$94.3 billion in the first half of this year, with revenue up 12.1 percent to NT$721.8 billion.
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