FPG's four major subsidiaries saw sales soar 40% in 2004

Jan 18, 2005 Ι Industry In-Focus Ι General Items Ι By Ben, CENS
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Taipei, Jan. 18, 2005 (CENS)--Four major subsidiaries under the Formosa Plastics Group (FPG), including Formosa Plastics Corp. (FPC), Nan Ya Plastics Corp., Formosa Chemical & Fiber Corp. (FCFC), and Formosa Petrochemical Corp. (FPCC), registered record combined sales of NT$781.4 billion (US$24.41 billion at US$1:NT$32), for a sharp annual growth of 40%.

Besides in Taiwan, FPG also has massive petrochemical investments in the U.S., which generated revenues of over NT$300 billion (US$9.37 billion) last year. If including revenues from its operations in the mainland China, the group's aggregate revenues broke the NT$1 trillion (US$31.25 billion) mark last year, ranking seventh or sixth in the world's petrochemical sector.

After scoring record high sales last year, FPC is expected to enjoy a sales growth of 10% to 15% with fat profits this year, a domestic institutional investor predicted.

Although the world's petrochemical industry wouldn't reach its peak until 2006, many institutional investors doubt FPC could achieve a substantial sales growth this year because they believed the prices of such raw materials as crude oil wouldn't rise sharply. Many predicted international crude oil price would drop back to the range of between US$35 and US$40 per barrel this year after hitting a high of US$55 last year.

The skyrocketed price hike in crude oil has once sharply pushed up the prices of plastic basic materials as ethylene and polyethylene (PE), and the chemical-fiber material of ethylene glycol (EG). The price of PE and EG was once quoted at a high of US$1,200 per metric ton last year. Currently the quotation prices of the two materials have retreated to between US$950 and US$970 for PE and US$950 for EG, per metric ton.

As the prices of crude oil, petrochemical basic materials, plastic materials and chemical-fiber materials will not rise substantially, downstream manufacturers are not expected to procure materials in a hasty way this year. That's why FPC, which focuses on the production of oil and petrochemical products, is expected to see slow sales growth this year.

Since mainland authority implemented macroeconomic-control policy since April last year, mainland's demand for raw materials, including plastic and petrochemical materials, has slowed down. If there are no others to replace the mainland in procuring raw materials in a large quantity, the prices of the raw materials this year are unlikely to remain as strong as last year.

The four major subsidiaries of the FPG each posted earnings per share of between NT$5 (US$0.15) and NT$8 (US$0.25) last year.
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