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The revenues of Nan Ya Plastics
totaled US$5.194 billion in 2004, an increase by 29.9% from
US$3.999 billion of 2003. The profit before tax for the
same year was US$1.416 billion, an increase by 154.4% from
US $0.565 billion of 2003.
In the first half of 2004, increase in the demand of various
products was seen due to the global economic recovery. Together
with the rise of the raw material price, the domestic economic
condition ameliorated. Yet, the economic growth turned conservative
as uncertainties arose in the second half of the year after
the soar of oil price, rise of interest rate and the economic
regulation of China. Though the situation was uncertain,
we adhered to our long-standing spirit of inquiring into
the root of the matter and where there's a will, there is
a way, and continued with various reforms to strengthen
our business structure, cut costs and enhance production
efficiency and product quality to overcome operation difficulties
and optimize operation performance. In the area of plastic
products, though it was difficult to shift the cost of some
products due to the increase of raw material price, the
income and profits gradually increased as the demand of
the Sixth Naphtha Cracker (SNC) specialty chemicals grew
stronger after the completion of the BPA plant when the
overall yield and price increased. In the area of electronic
materials, sales grew extensively due to the demand of downstream
PCB makers increased. Profits from sales of fiber products
grew steadily as the EG demand of upstream manufacturers
increased. As a result, the overall incomes and profits
increased significantly.
Nan Ya Plastics primarily manufactures plastics, fiber and
electronic materials. In the area of plastic products, total
domestic consumption of PVC resin in 2004 was 370,000 tons,
nearly the same as the year before. As the selling price
increased, the overall sales performance of plastic products
in 2004 outperformed that of 2003. |
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| Attracted
by the cheap labor, low land cost and open policy,
many tertiary plastic processing businesses moved to
China and acquired raw materials in the local markets.
As a result, demand of domestic secondary products
decreased, and the condition was increasingly
difficult. Coupled with rise of the petrochemical
material price, it was difficult to shift the cost of
secondary products.
Therefore, in
addition to transferring the production of some
traditional plastic products to our China subsidiary
in order to provide proximate supply of raw materials
to local Taiwanese investments and Chinese customers,
the parent company in Taiwan has launched a
transformation as a response to the changing and
adverse business environment.
It included enhancing
competitiveness by streamlining operation scale,
enhancing utilzation, simplifying labor force,
reducing production cost; accelerating the development
of high-quality environmental special and value-added
products using new materials and offering new
applications; establishing close cooperation with
international customers to capture the market trend,
to develop new products, and to expand the scope of
plastic application, in order to maintain the
profitability of plastic processing products by means
of market segmentation. Secondly, growth in the SNC
specialty chemicals such as BPA, 1,4BG, DOP and INA,
was seen as the price of petrochemical raw materials
increased.
Thanks to start
production of the new 100,000 tons/year BPA plant in
Q3 of the year when the demand was running high, we
could take the opportunity to boost incomes. Also due
to the addition of new capacity of specialty chemicals
and the de-bottlenecking program, sales of
petrochemical products increased annually, the income
earned will account for an increasing percentage of
our overall profit. |
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NPC
Mailiao EG Plant |
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Since
most domestic tertiary processing factories have moved to
China and the factory investments of local competitors, it
has become an area of the fast-growing demand of plastic products.
To provide timely service to local customers, to ensure proximate
supply of raw materials, to capture the changes in local markets,
we have erected many plastic product plants in different parts
of China over the years.
Such as the flexible PVC sheeting and rigid PVC film plants
in Guangzhou and Nantong, and the PU synthetic leather, casting
PVC leather, engineering plastics and UP resin plants in Huizhou
that have been operating in full-capacity, these plants have
been making profits due to the transfer production out of
the optimal arrangement of cost control and supply and demand
balancing through flexible dispatch of production-sales between
Taiwan and China, and the active cultivation of local markets.
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| Our
flexible PVC sheeting and rigid PVC film plants
in the United States are facing threats from
competitions of Asian imports and the rise of
raw material price.
Aside from
making continual improvement in lead-time and
quality, enhancing production efficiency,
streamlining production scale and reducing cost,
we have adjusted the product mix in accordance
with the local market and customer needs to
boost sales and seek further development of the
company. |
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Nanya
PVC sheeting is used
as walling and tablecloth
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Total
sales volume of polyester fiber products in 2004 was to 660,000
tons, 3.7% less than last year. Though it was difficult to
shift the cost due to the soar of oil price, the capacity
expansion of China, and the increase of raw material price,
growth in both sales and profits of our fiber products was
seen despite the high cost thanks to the success in the R&D
and promotion of value-added fiber products, such as fine
denier polyester fabrics, microfibers, full dull draw texture
yarn etc. which were highly recognized by the customer.rs.
On the other hand, the EG (upstream material of fiber) supply
was critical as the demand increased due to the capacity expansion
of China fiber plants. Together with the soar of international
oil price, the price of petrochemical material rose accordingly.
The EG price thus kept running high. Fortunately, our EG plants
with a combined capacity at 870,000 tons/year could manage
to fulfill both internal and export demands. Moreover, coordinating
with the phase VI expansion project of the SNC, we are expanding
an EG plant with a capacity of 600,000 tons/year. After the
completion of the plant, the combined EG capacity will increase
to 1.47 million tons/year and will create sizable contribution
to company profits.
Our polyester fiber plant in South Carolina with capacity
at 860,000 tons/year generated revenues amounting to US$0.92
billion in 2004. It preliminarily produces conjugate staple
fiber and PET chips. Together with the rise of raw material
price and the increase in demand, both the price and quantity
increased. While the sales of specialty products, such as
conjugate staple fiber and carpet staple fiber of higher added
value, increased, we saw growth in the overall performance.
Our upstream raw material EG plant in Texas with capacity
at 350,000 tons/year chiefly supplies raw materials to our
polyester fiber plant in South Carolina and sells materials
to other plants. |
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of rising EG prices, both revenues and profits
increased in 2004. Part of the polyester fiber
plant with capacity at 240,000 tons/year
constructed in Dongnai, Vietnam, under joint
venture with Formosa chemical & fiber
corporation was completed and started
production.
The China
polyester fiber plant project is currently under
progress and will be completed and start
production in 2006. |
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NPC
Jingshin Plant
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The
global economic recovery shed new light on the electronic
material market in 2004. Leading electronics, information
and communication companies launched operational structure
integration and introduced new products to the market. Together
with the rebound of the demand of PCs, mobile phones and optoelectronic
products, the demand of upstream electronic materials of PCB
was vigorous. The shortage of copper clad laminate (CCL),
fiberglass cloth and expoxy resin was serious, the demand
kept rising, the selling price inflated monthly. As a result,
both revenues and profits grew significantly. To ensure the
growth of the company in keen competitions, we provided quick
and reliable delivery and post-delivery services, kept close
attention to the supply and demand condition, made timely
adjustment to the sales strategy and product mix, reinforced
technology development and product certification, launched
active cooperation with leading manufacturers in Europe, the
USA and Japan, and promoted the sales of products with higher
added value and performance in addition to taking the cost
advantage of vertical integration. Secondly, to accelerate
the China market cultivation, we sent more staffs to China
and established agency relations with local agents in order
to expand our channels for winning more contracts and to provide
proximate supply of materials. For example, our Kunshan complex
has started production of various upstream electronic materials,
such as CCL, glass fiber cloth, glass fiber yarn, epoxy resin,
etc. To cope with the increasing demand, we have planned expansion
projects for these plants. After the completion of the project,
we are sure that the product range will be fuller and the
revenue will growth extensively.
The continual recovery of the electronic industry worldwide
in 2004 has boosted the growth of the PCB industry. After
transforming into a manufacturer of higher level circuit boards,
Nan Ya Printed Circuit Board Corporation, a spin-off of Nan
Ya Plastics, enter the high-level product market with competitive
technology and cost advantage. Furthermore, we saw growth
in revenues as it won orders of higher level circuit board
from Japan and the USA. The company has changed its direction
toward products of multiple niches and continued to cultivate
world leading packaging service providers to improve its technology
of flipchip and to accumulate experience in mass production.
It also participated in collaborative development, test run
and certification projects of world leading manufacturers,
such as the next generation CPU and chipsets with Intel, and
other circuit boards for use on communication products, mobile
phones and vehicles in order to enhance competitive strength.
The capacity of the Kunshan PCB Plant in China has been expanded
to 7.2 million sq. inch/year to produce traditional PCBs and
provide proximate material supply to local downstream assembly
plants. In response to the augmenting market demand, the expansion
of the plant to 10.8 million sq. inch/year is under progress.
Taking the advantage of mutual support between China and Taiwan,
we will demonstrate the strength of mutual support through
centralization of management to create more profits. |
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| Looking
into 2005, the global economy will grow slowly due to the
soaring oil prices, rise of interest rate, fall of the US
currency in the foreign exchange market, and the economic
regulation of China. As the global situation often affects
the domestic economy, and together with the imbalance of the
domestic industrial structure and the increasingly keen global
competitions, our processing-based businesses will be facing
a harsher time. To overcome these difficulties, we will review
and strengthen the competitiveness and future development
of processing products for the upgrading and optimization
of all processing products.
Furthermore, in order to strengthen
operations for higher profits by adjusting the development
of the company, we will focus on the R&D of specialty
chemicals of higher profits and petrochemical products with
bigger markets. For our investments in China, we will adjust
the production lines and make reasonable improvement of plants
that have started mass production according to local needs
in order to enhance competitiveness. On the other hand, we
will continue to expand the capacity of the PCB and electronic
material production of our Kunshan Plant to fulfill the augmenting
local demand and securing our competitive strength by reducing
cost and shortening the lead-time.
To ensure the further growth
of the company, we will continually expand the capacity of
our petrochemical, plastic, fiber and electronic material
plants at home, in order to establish a complete global production
system with our rich operation know-how and advantage of vertical
integration and diversification. Together that our investments
in Formosa Petrochemical Corporation, Mailiao Power Corporation,
Nanya Technology Corporation, PFG Fiber Glass Corporation,
and Nan Ya Printed Circuit Board Corporation and US subsidiaries
will make greater contribution to our return from investments,
we firmly believe that we are capable of surmounting any difficulty
and maintaining steady growth in difficult time. |
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After
the No.6 Naphtha Cracking petrochemical plants
started operations, the sales volume of petrochemical
and plastic products since 2000 has exceeded that
of the fiber and textile products, marking the
FPG's success in transformation. |
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