Formosa Plastics’ Units Miss Profit Estimates on Rising Costs
Formosa Plastics Group’s four biggest units reported lower-than-expected first-quarter profits because of increased costs and the Taiwan government’s control on fuel prices.
Oil refiner Formosa Petrochemical Corp. (6505) posted a pretax profit of NT$4.87 billion ($165 million) in the three months ended March 31, down 76 percent from NT$20.1 billion a year earlier, its parent said in a statement today. The average of four analyst estimates compiled by Bloomberg was NT$5.32 billion. Plastics processor Nan Ya (1303) Plastics Corp. reported a profit of NT$1.7 billion, missing the NT$4.82 billion analysts estimated.
Crude oil rose in the first quarter on U.S. economic recovery and sanctions targeting Iran, increasing costs for refiners and petrochemical makers. Taiwan’s government restricted fuel-price gains by state-run CPC Corp. to stall inflation, eroding profit margins of the refiner and Formosa Petrochemical, which followed its larger peer in price changes.
“Formosa Petrochemical didn’t make much money from oil products in the first quarter,” said Max Chan, a Taipei-based analyst at Capital Securities Corp. with a “buy on weakness” rating on the stock. “Petrochemicals rose, but costs rose more.”
Chemical producer Formosa Chemicals & Fibre Corp. (1326) posted a pretax profit of NT$3.67 billion in the first quarter. The average of five analyst estimates compiled by Bloomberg was NT$6.02 billion.
Polyvinyl chloride maker Formosa Plastics Corp. (1301) posted a pretax profit of NT$5.43 billion, less than the NT$8.19 billion average of two analyst estimates compiled by Bloomberg.
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