TAIPEI (CNA) — The four major subsidiaries of the Formosa Plastics Group (FPG) saw their combined net profit for the third quarter of this year plunging more than 36 percent from a year earlier, the four companies said Tuesday.
The fall was due to falling product prices at a time of weakening global demand caused by trade friction between the United States and China, the companies said.
The combined net profit of the four units — Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp. — totaled NT$48.85 billion (US$1.58 billion), down 36.5 percent from a year earlier.
On a quarter-on-quarter basis, however, the combined profit rose 62.7 percent in the third quarter, largely on the back of income of cash dividends from their equity investments.
The four companies said they generated NT$21.56 billion in income from cash dividends and other non-core investments for the July-September period, accounting for about 44 percent of their total net profit for the quarter.
Formosa Plastics, the flagship entity of FPG, said the global trade disputes had an adverse impact on market sentiment, prompting customers to turn cautious about their business outlook, sending demand lower in the third quarter.
Citing a fall of US$6.2 in the average crude oil price per barrel quoted in Dubai in the third quarter, Formosa Plastics said the plunge in crude prices amid the trade tensions dealt a blow to petrochemical product prices in the three-month period.
Formosa Plastics, which posted NT$15.68 billion in net profit in the third quarter, down 14.1 percent from a year earlier but up 51.4 percent from a quarter earlier, with earnings per share (EPS) of NT$2.46, said prices of its benchmark products in September alone fell up to 40 percent from a year earlier.
For its part, Nan Ya Plastics recorded NT$8.02 billion in net profit for the third quarter, down 56.1 percent from a year earlier but up 36.9 percent from a quarter earlier, with EPS of NT$1.01.
Nan Ya Plastics said the decline in its bottom line also resulted from falling global demand, which pushed down product prices, with ethylene glycol prices suffering the steepest fall.
Formosa Chemicals & Fibre, meanwhile, said prices of its products fell about 30 percent from a year earlier in the third quarter amid lingering caution toward the market outlook among its clients.
As a result, the company’s net profit totaled NT$12.71 billion in the July-September period, down 35.6 percent from a year earlier but up about 120 percent from a quarter earlier, with EPS of NT$2.18.
Due to the annual maintenance of its alkene factory, along with falling global demand, Formosa Petrochemical said its net profit for the third quarter fell 40 percent from a year earlier to NT$12.44 billion with EPS of NT$1.31. However, the third-quarter figure was up 55.1 percent from the second quarter.
In the first nine months of this year, the four companies posted NT$109.82 billion in net profit, down 46.9 percent from a year earlier.
Looking ahead, the four companies said, the global trade war is expected to dominate demand for the fourth quarter, so they remained cautious.
By Pan Yi-ching and Frances Huang