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Formosa Plastics Posts Higher Profit as Chemical Demand Climbs

Jan. 3 (Bloomberg) -- Formosa Plastics Group’s biggest units reported improved quarterly earnings as demand for petrochemicals increased.

Formosa Plastics Corp., a polyvinyl chloride maker, posted a pretax profit of NT$2.85 billion ($98 million) in the three months ended Dec. 31, the parent company said in a statement today. That compared with NT$942 million a year earlier and the NT$5.52 billion average of six analyst estimates compiled by Bloomberg.

Manufacturing in China, Taiwan’s biggest overseas market, expanded for a third straight month, based on the Purchasing Managers’ Index, adding to evidence of a recovery in the global economy. The island’s industrial output rose at the fastest pace in nine months in November, with production of chemical materials gaining 7.3 percent from a year earlier.

“There are signs that demand is coming back,” said Filoli Tsai, a Taipei-based analyst at IBTS Investment Consulting Co., who rates Formosa Plastics neutral. “There’s been some restocking for commodities.”

Chemical producer Formosa Chemicals & Fibre Corp. turned to a pretax profit of NT$3.4 billion in the fourth quarter from a loss of NT$2.21 billion a year earlier. The average of nine analyst estimates compiled by Bloomberg was for a pretax profit of NT$3.6 billion.

Plastics processor Nan Ya Plastics Corp. reported a pretax profit of NT$136 million, compared with a loss of NT$1.57 billion a year earlier. Seven analysts had expected an average profit of NT$2.85 billion.

Oil refiner Formosa Petrochemical Corp. posted a pretax profit of NT$1.98 billion. The average of eight analyst estimates compiled by Bloomberg was for a profit of NT$6.18 billion. The company reported a loss of NT$4.39 billion a year earlier.

Formosa Petrochemical’s fourth-quarter earnings were eroded by the reduced value of stockpiles after crude oil prices dropped, Lin Keh-yen, a spokesman for the company, said in a press conference in Taipei today.

To contact the reporter on the story: Yu-huay Sun in Taipei at ysun7@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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