Formosa Plastics Group sales to rise 10% in 2008

17 January 2008 04:20  [Source: ICIS news]

SINGAPORE (ICIS news)--Formosa Plastics Group, the Taiwanese petrochemical major, expects sales to grow more than 10% in 2008 on strong demand after raking in a record revenue of nearly New Taiwan dollar (NT$) 2,000bn ($62bn) last year, a company official said on Thursday.

The official was confirming comments made by the group’s CEO William Wong at a media gathering on Wednesday.

Formosa’s four listed units – Formosa Plastics Corp, Formosa Petrochemical, Nan Ya Plastics and Formosa Chemicals and Fibre Corp – posted total revenues of NT$1,349bn in 2007.

Their December sales figures met or exceeded Goldman Sach’s expectations, analyst Jim Hung said in a research note.

He added that the group’s 2008 net earnings would grow 5.2-14.3% year-on-year, either from volume increase or margin expansion.

“Given [that] we remain positive on the refinery cycle and neutral on the chemical cycle, we do not expect a significant margin correction in FY08 (financial year 2008),” Hung said.

In 2008, Formosa Plastics would expand its acrylic esters capacity by 48% to 268,000 tonnes/year while its carbon fibre output will rise 121.5% to 8,750 tonnes/year.

Angela Hsiang, analyst from KGI Securities, said solid ethylene glycol (EG) earnings would bolster Nan Ya’s overall bottom line in the fourth quarter of 2007.

Its earnings before interest tax, depreciation and amortisation (EBITDA) was expected to rise 56.9% to around NT$40bn in 2007 from a year ago, she said in a research note.

Nan Ya’s operating margin and earnings will also benefit from higher margin products which came on stream last year, Hsiang said.

Its operating margin could reach 14.4% in 2008, up from 13.8% a year ago, she added.

($1=NT$32.27)

By: Florence Tan
+65 6780 4359

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