Bulletin: Extended Downturn Erodes Formosa Plastics Group Companies' Rating Buffers

TAIPEI (S&P Global Ratings) Oct. 12, 2022--Four key Formosa Plastics group companies can absorb the financial impact of weak profitability and operating cash flow over the next two to three quarters because of the group's strong capital structure. That's despite a narrowing rating buffer on each of the Taiwan-based chemical and oil refining companies. Formosa Plastics Corp. (BBB+/Stable/--), Nan Ya Plastics Corp. (BBB+/Stable/--), Formosa Chemicals&Fibre Corp. (BBB+/Stable/--), and Formosa Petrochemical Corp. (BBB+/Stable/--) reported operating losses of new Taiwan dollar (NT$) 18.2 billion in the third quarter of 2022. This was the result of inventory losses and thin product spreads stemming from high and volatile oil prices and ongoing COVID-19 curbs in China. We anticipate China's zero-COVID policy, and

...TAIPEI (S&P Global Ratings) Oct. 12, 2022--Four key Formosa Plastics group companies can absorb the financial impact of weak profitability and operating cash flow over the next two to three quarters because of the group's strong capital structure. That's despite a narrowing rating buffer on each of the Taiwan-based chemical and oil refining companies. Formosa Plastics Corp. (###+/Stable/--), Nan Ya Plastics Corp. (###+/Stable/--), Formosa Chemicals & Fibre Corp. (###+/Stable/--), and Formosa Petrochemical Corp. (###+/Stable/--) reported operating losses of new Taiwan dollar (NT$) 18.2 billion in the third quarter of 2022. This was the result of inventory losses and thin product spreads stemming from high and volatile oil prices and ongoing COVID-19 curbs in China. We anticipate China's zero-COVID policy, and an extended slump in the country's property market, will slow recovery in China's domestic demand for the rest of 2022. In addition, high inflation and interest rates will hurt exports...

Bulletin