Formosa Plastics Group (台塑集團), Taiwan’s largest industrial conglomerate, yesterday said that three major subsidiaries incurred losses last quarter while the fourth eked out a tiny profit, as soft market demand and price competition weighed on their earnings.
Nan Ya Plastics Corp (南亞塑膠), whose main business involves making processed plastic and chemical products, electronic materials and polyester fiber, recorded NT$60 million (US$1.86 million) of net profit during the July-to-September period, or earnings of NT$0.01 per share, the company said.
The lackluster results suggested a slowdown from three months earlier, while declining international oil prices weighed on plastic and chemical products.
Photo: Fang Pin-chao, Taipei Times
Their profit margin was also harmed by unfavorable currency exchange rates and the need to recognize losses in the affiliated Formosa Petrochemical Corp (台塑石化), it said.
However, selling prices picked up for materials used in polyester and printed circuit boards ahead of the high sales season for technology products, it added.
Formosa Petrochemical Corp (台塑石化), primarily engaged in the business of refining crude oil, selling refined petroleum products and producing and selling olefins from its naphtha cracking operations, booked losses of NT$3.08 billion, or NT$0.32 per share, worsening from three months earlier, it said.
The privately owned refinery attributed the poor showing to tepid demand and oil export nations’ announcement that they would cut output from December amid a supply glut.
The drop in oil prices grew more evident last quarter and deepened losses of inventory and purchased materials, the company said.
Inventory losses alone amounted to NT$2.42 billion, surging from NT$170 million in the April-to-June period, it said.
Formosa Plastics Corp (台灣塑膠), a vertically integrated supplier of plastic resins and petrochemicals, reported losses of NT$3 billion, or NT$0.49 per share, as it idled seven plants to conduct annual maintenance, up from four in the preceding quarter, the company said.
The bleak figures stemmed from unprofitable core businesses and unfavorable influences of Typhoon Gaemi in July that disrupted the operation of plants in Kaohsiung and weakened their output, it said.
At the same time, raw material prices remained high, putting pressure on the profit margin, it said.
The company also recognized losses from indirect investments in affiliated businesses in Taiwan and in the US.
Formosa Chemicals and Fibre Corp (台灣化學纖維), which produces and sells petrochemical products, nylon fibers and rayon staple fibers in Taiwan and internationally, posted losses of NT$1.93 billion, or NT$0.33 per share.
Listless market demand and selling prices were to blame, the company said, adding that it is reducing capacity to speed up inventory adjustments.
The company is closely monitoring China’s latest stimulus measures and would move to take advantage of any business opportunity, it said.
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