Formosa Petrochemical Corp (台塑石化) yesterday said crude oil prices are expected to decline until the end this year, as global demand might weaken amid growing uncertainty over the US’ trade policy.
“We expect Brent crude prices to decrease from the current level of nearly US$75 per barrel during next quarter and the fourth quarter,” Formosa Petrochemical chairman Chen Bao-lang (陳寶郎) told reporters after the company’s annual shareholders’ meeting in Taipei.
Despite a decreasing supply from Venezuela and Iran, Brent crude prices would likely start to fall over the next two quarters, as the US government’s policy has sparked growing protectionism around the world, affecting oil demand, he said.
“Brent prices might fall to US$70 per barrel next quarter and US$66 in the fourth quarter,” Chen said, citing the company’s latest estimate.
At the meeting, shareholders approved a company proposal to distribute cash dividends of NT$6.3 per share, a 10-year high, based on last year’s earnings per share of NT$8.42.
That translates into a dividend yield of 5.27 percent, based on Formosa Petrochemical’s closing price of NT$119.5 yesterday.
The company posted sales of NT$624.11 billion (US$21.18 billion) last year, up 14 percent from NT$546.16 billion in 2016, while net profit rose 5.82 percent to a record high of NT$80.17 billion from NT$75.76 billion in 2016, company data showed.
Formosa Petrochemical attributed the strong earnings performance to a broadening spread between revenue and material costs because of rising oil prices, as well as falling supply from its Asian competitors.
The company said it would continue pouring resources into the research and development of high-value-added products in petrochemical supply chains this year to improve its product portfolio.
It said it has been testing hydrogenated styrene block copolymer products in a venture with US-headquartered Kraton Performance Polymers Inc since February last year.
A project with Japan’s Idemitsu Kosan Co Ltd is scheduled to become operational next year, producing an expected annual capacity of 43,800 tonnes of hydrogenated hydrocarbon resins, it said.
Formosa Petrochemical expects its gasoline and diesel sales to reach 5.97 billion liters and 10.52 billion liters respectively this year, with its plants operating at full capacity, its annual report showed.
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
SECURITY WARNING: The company possesses key 3-nanometer technology, and Taiwan should prevent it from being transferred to China, a lawmaker said The Ministry of Economic Affairs yesterday said it would conduct a “strict review” of any proposed acquisition of Taiwanese tech company Source Photonics Co (索爾思光電), following media reports that a Chinese firm was planning to buy the company in the Hsinchu Science Park (新竹科學園區). Local media reported that Suzhou Dongshan Precision Manufacturing Co (東山精密), China’s largest printed circuit board manufacturer, had announced plans to acquire Source Photonics for 5.9 billion yuan (US$823.1 million). The ministry said it has not received an application from Source Photonics and has formally notified the company that any buyout would constitute a change in its ownership structure. The
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
RSS