Formosa Plastics Group of Taiwan to See Promising Q2 Amid Recovering Crude Oil Prices
2015/05/13 | By Steve Chuang
At a joint press conference held earlier, the four flagship firms of the group, namely Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp., together reported consolidated revenue of NT$131.932 billion (US$4.188 billion) for April, inching up 0.7 percent from March but declining 16.3 percent year on year (YoY), to meet market expectations. Noteworthy is that the group's consolidated revenue has exceeded the NT$130 billion mark for two consecutive months after several months of serious contraction, to signal an ongoing turnaround in the quarter.
Separately, Nan Ya scored revenue of NT$28.73 billion (US$912.06 million) for April, inching down 0.5 percent month on month (MoM) but up 4.2 percent YoY, as the only affiliate with a positive yearly growth among the four flagship firms.
While ascribing the monthly revenue drop mainly to its declining sales of electronic materials amid doldrums in the market for consumer electronics, Nan Ya attributed its positive yearly growth to a couple of factors, including generally increasing capacity utilization among its downstream polyester makers; recent price spikes of ethylene glycol (EG) following an explosion at an EG factory owned by the Chinese subsidiary of Sinopec, to have paralyzed part of the country's EG supply chain to cause the prices to hike; and its resumption of production of bisphenol A (BPA) after regular facility maintenance.
Meanwhile, Formosa Plastics posted April revenue of NT$18.026 billion (US$575.25 million), edging down 0.7 percent MoM and 8.6 percent YoY, to which the company attributes the recent unseasonably heavy downpours in India, to have dampened local market demand for polyvinyl chloride (PVC), and the end of a seasonal boom in China's market for agricultural films. The two abovementioned factors, the firm stressed, neutralized growth momentum stemming from growing international prices of PVC, polyethylene, polypropylene and butyl alcohol as seen recently.
On another front, Formosa Chemical & Fiber and Formosa Petrochemicals reported April revenue of NT$30.222 billion (US$959.94 million) and NT$54.954 billion (US$1.744 billion), respectively, up 2.3 percent and 0.9 percent YoY.
After solid performances in April, the four flagship firms are all optimistic toward Q2 for a variety of reasons, including the traditional high season, monetary easing by China, and a strong recovery of international crude oil prices.
With Q2 being typically the peak season for plastics and petrochemical sectors, Formosa Plastics forecasts its capacity utilization rate to surge to 92.6 percent during the quarter from 89 percent as seen a quarter earlier, hence to drive its revenue.
Nan Ya also looks to a promising Q2, noting that downstream manufacturers have generally been motivated by recent price hikes of EG, BPA and other polyester products to begin restocking, hence prompting Nan Ya to ramp up production of polyesters and EG in China, with the firm confirming its EG capacity has been fully booked throughout May.
| Formosa Plastics Flagship Firms' Performance in April, 2015 | |||||
| Company
| April Performance
| Jan.-Apr. Performance
| |||
| Revenue
| MoM Growth Rate
| YoY Growth Rate
| Cumulative Revenue
| YoY Growth Rate
| |
| Formosa Plastics Corp.
| NT$18.026 Bn.
| -0.7%
| -8.6%
| NT$65.724 Bn.
| -8.4%
|
| Nan Ya Plastics Corp.
| NT$28.730 Bn.
| -0.5%
| 4.2%
| NT$108.256Bn.
| 3.1%
|
| Formosa Chemicals & Fibre Corp.
| NT$30.222 Bn.
| 2.3%
| -17.9%
| NT$111.131Bn.
| -19.3%
|
| Formosa Petrochemicals Corp.
| NT$54.954 Bn.
| 0.9%
| -25.2%
| NT$209.988Bn.
| -37.7%
|
| Total
| NT$131.932Bn.
| 0.7%
| -16.3%
| NT$495.066Bn.
| -24.0%
|