Formosa Plastics Group’s (台塑集團) four major units on Thursday reported a combined revenue for last month of NT$116.92 billion (US$3.88 billion), 0.1 percent higher than the previous month, but down 15.3 percent from a year earlier, as the Lunar New Year holiday shortened the number of working days, and the 2019 novel coronavirus outbreak affected transportation and logistics.
Among the units, Formosa Plastics Corp (台灣塑膠) saw revenue last month fall to a 40-month low, while Formosa Chemicals & Fibre Corp (台灣化學纖維) hit a low of nearly 47 months, prompting the two firms to revise first-quarter projections downward, which they attributed to the outbreak.
Formosa Plastics Corp said in a regulatory filing that revenue last month was NT$13.85 billion, down 11.4 percent from December, as a result of declining sales and product prices.
“Due to the holiday, most downstream processing customers halted and reduced purchases, which reduced the number of shipping days. In addition, the coronavirus outbreak extended the holiday and caused a transportation shutdown ... and decreasing downstream demand,” Formosa Plastics Corp said.
Compared with December, sales of polyvinyl chloride, polyethylene and polypropylene products fell, the company said, adding that product prices also declined across Asia.
Revenue fell 28.9 percent from a year earlier due to the impact of the week-long holiday, the US-China trade dispute, a global economic slowdown and greater capacity among regional peers, it said.
Formosa Chemicals & Fibre Corp’s revenue decreased 7.1 percent month-on-month to NT$22.65 billion from December, as the holiday reduced the number of working days. On an annual basis, revenue fell 28.8 percent, as both sales and prices were lower than a year earlier.
Formosa Petrochemical Corp (台塑石化) posted revenue of NT$58.11 billion, an increase of 10 percent from December, as revenue in its refining business rose 13.7 percent and its naphtha cracking business grew 0.9 percent, a company filing with the Taiwan Stock Exchange said.
However, compared with a year earlier, revenue fell 6 percent due to a 3.9 percent decline in sales at the refining business and a 3.1 percent decline in sales at the naphtha cracking business, it said.
Meanwhile, Nan Ya Plastics Corp (南亞塑膠) reported revenue of NT$22.31 billion last month, down 6.8 percent monthly and 10.7 percent annually.
Considering the downward trend in oil prices and weak downstream demand, the earnings momentum of Formosa Plastics Group’s units will remain lackluster in the first quarter, Yuanta Securities Investment Consulting Co (元大投顧) said in a note.
"We believe 1Q will be the trough for the year, as demand should recover once the coronavirus situation eases," Yuanta said.
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