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Formosa Plastics Corporation 台灣塑膠工業股份有限公司 2018 Q1 Operation Performance Highlights

Formosa Plastics Corporation 台灣塑膠工業股份有限公司 2018 Q1 Operation Performance Highlights. March 31, 2018. Agenda. Business Review Financial Highlights Appendices. Business Review. Revenue Breakdown by Product (IFRSs consolidated). 2017 Q1 Net Sales: NT$47.8 billion. 2018 Q1 Net Sales:

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Formosa Plastics Corporation 台灣塑膠工業股份有限公司 2018 Q1 Operation Performance Highlights

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  1. Formosa Plastics Corporation台灣塑膠工業股份有限公司2018 Q1Operation Performance Highlights March 31, 2018

  2. Agenda • Business Review • Financial Highlights • Appendices

  3. Business Review

  4. Revenue Breakdown by Product (IFRSs consolidated) 2017 Q1 Net Sales: NT$47.8 billion 2018 Q1 Net Sales: NT$54.2 billion • PVC accounted for 20% and 24% of revenue in 2018 Q1 and 2017 Q1 respectively • PE (HDPE/EVA/LLDPE) accounted for 17% and 18% of revenue in 2018 Q1 and 2017 Q1 respectively • Specialty Chemicals (AN/MMA/ECH/MTBE) accounted for 13% and 10% of revenue in 2018 Q1 and 2017 Q1 respectively • Revenue in 2018 Q1 rose 13.3% from 2017 Q1, mainly due to increasing ASP of Caustic Soda, AN and ECH, and increasing sales volume of PE, PP and SAP.

  5. Operating Profits Breakdown by ProductSpecialty Chemicals & PVC are the key profit contributorsin 2018 Q1 Operating Profits Operating Margins % % Note : Specialty Chemicals include AN, MTBE, MMA and ECH

  6. Key Product HighlightsMarket Dynamics for PVC Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue stood at NT$11.4bn in 2017 Q2 following sales volume increases but ASP decreases • Sales volume rose 8.8% to 418KMT in 2017 Q2 from 2017 Q1 due to demand increase from India and China • ASP fell 8.1% in 2017 Q2 from 2017 Q1 due to (1)more PVC output given higher Caustic Soda and its by-product chlorine utilization rate in China; (2)bearish ethylene price

  7. Key Product HighlightsMarket Dynamics for PVC Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 92.6% and 92.8% in 2017 Q2 and 2017 Q1 respectively • Production volume decreases 0.2% to 402KMT in 2017 Q2 from 403KMT in 2017 Q1

  8. Key Product HighlightsMarket Dynamics for PVC Gross Margin Operating Margin • Gross and operating margin fell in 2017 Q2 from 2017 Q1 due to lower ASP

  9. Key Product Highlights#1 PVC Producer in Taiwan 2018 Q1 Total Taiwan PVC Demand: 135,000 MT 2018 Q1 External Sales of PVC: NT$ 10,738 million • PVC annual production capacity is 1,735KMT with sales volume of 418KMT in 2017 Q2 • Total demand in Taiwan for 2017 Q2 was 3.2% lower than 2017 Q1 • FPC commands a 66% market share in Taiwan in 2017 Q2 • Taiwan sales accounted for 21% of total sales in 2017 Q2, 37% and 24% of sales sold to Mainland China and South Asia (India most) respectively

  10. Key Product HighlightsMarket Dynamics for Caustic Soda Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue rose 8.9% to NT$4.9 bn in 2017 Q2 from 2017 Q1 following sales volume and ASP increase • Sales volume rose 3.4% to 346KMT in 2017 Q2 from 2017 Q1 due to demand increase from global aluminum industry • ASP rose 5.3% in 2017 Q2 from 2017 Q1 due to (1)supply side reform and increasing usage from environmental treatment in China; (2)demand increase from global aluminum industry

  11. Key Product HighlightsMarket Dynamics for Caustic Soda Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 94.5% and 93.3% in 2017 Q2 and 2017 Q1 respectively • Production volume increases 1.3% to 402KMT in 2017 Q2 from 397KMT in 2017 Q1

  12. Key Product HighlightsMarket Dynamics for Caustic Soda Gross Margin Operating Margin • Gross and operating margin fell in 2017 Q2 from 2017 Q1 due to higher electricity cost in summer time from June

  13. Key Product Highlights#1 Caustic Soda Producer in Asia 2018 Q1 External Sales of Caustic Soda: NT$ 6,350 million 2018 Q1 Total Taiwan Caustic Soda Demand: 324,000 MT • Caustic Soda annual production capacity is 1,700KMT, the largest in Asia, with sales volume of 346KMT in 2017 Q2 • About 20.3% of production was for internal consumption • Total demand in Taiwan for 2017 Q2 was 23.5% higher than 2017 Q1 • FPC commands a 72% market share in Taiwan in 2017 Q2 • Taiwan sales accounted for 51% of total sales in 2017 Q2, 26% and 22% of sales sold to Australia and USA respectively

  14. Key Product HighlightsMarket Dynamics for HDPE Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue rose 30.5% to NT$5.2 bn in 2017 Q2 from 2017 Q1 following sales volume increases • Sales volume rose 39.8% in 2017 Q2 from 2017 Q1 due to Linyuan HDPE plant shutdown for maintenance during 3/3~3/21 • ASP fell 6.7% in 2017 Q2 from 2017 Q1 due to bearish ethylene price

  15. Key Product HighlightsMarket Dynamics for HDPE Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 89.7% and 78.4% in 2017 Q2 and 2017 Q1 respectively • Production volume rose 14.4% to 127KMT in 2017 Q2 from 2017 Q1 due to Linyuan HDPE plant shutdown for maintenance during 3/3~3/21

  16. Key Product HighlightsMarket Dynamics for HDPE Gross Margin Operating Margin • Gross and operating margin fell in 2017 Q2 from 2017 Q1 given lower ASP

  17. Key Product Highlights#1 Producer of HDPE in Taiwan 2018 Q1 Total Taiwan HDPE Demand: 83,000 MT 2018 Q1 External Sales of HDPE: NT$ 4,293 million • HDPE annual production capacity is 566KMT with sales volume of 141KMT in 2017 Q2 • FPC commands a 56% market share in Taiwan in 2017 Q2 • Total demand in Taiwan for 2017 Q2 was 2.3% higher than 2017 Q1 • Taiwan sales accounted for 37% of total sales in 2017 Q2, with 41% of sales sold to Mainland China

  18. Key Product HighlightsMarket Dynamics for EVA Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue rose 22.2% to NT$2.7 bn in 2017 Q2 from 2017 Q1 following sales volume increases • Sales volume rose 33.0% to 60KMT in 2017 Q2 from 2017 Q1 due to Mailiao EVA plant shutdown for maintenance during 2/8~3/15 • ASP fell 8.2% in 2017 Q2 from 2017 Q1 due to 300KMT new capacity from Jiangsu Sailboat Petrochemical in China and bearish ethylene price

  19. Key Product HighlightsMarket Dynamics for EVA Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 85.2% and 63.7% in 2017 Q2 and 2017 Q1 respectively • EVA production volume rose 33.9% to 66KMT in 2017 Q2 from 2017 Q1 due to Mailiao EVA plant shutdown for maintenance during 2/8~3/15

  20. Key Product HighlightsMarket Dynamics for EVA Gross Margin Operating Margin • Gross and operating margin fell in 2017 Q2 from 2017 Q1 given lower ASP

  21. Key Product Highlights#1 Producer of EVA in Taiwan 2018 Q1 Total Taiwan EVA Demand: 11,000 MT 2018 Q1 External Sales of EVA: NT$ 2,986 million • EVA annual production capacity is 312KMT after the completion of new capacity in Ningbo (72KMT/Y) in 2016 Q2, with sales volume of 60KMT in 2017 Q2 • FPC commands a 24% market share in Taiwan in 2017 Q2 • Total demand in Taiwan for 2017 Q2 was equal to 2017 Q1 • Taiwan sales accounted for 5% of total sales in 2017 Q2, with 63% of sales sold to Mainland China and 21% to SE Asia

  22. Key Product HighlightsMarket Dynamics for LLDPE Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue fell 6.3% to NT$2.1 bn in 2017 Q2 from 2017 Q1 following ASP and sales volume decrease • Sales volume fell 1.4% to 56KMT in 2017 Q2 from 2017 Q1 • ASP fell 5.0% in 2017 Q2 from 2017 Q1 due to bearish ethylene price

  23. Key Product HighlightsMarket Dynamics for LLDPE Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 89.5% and 89.2% in 2017 Q2 and 2017 Q1 respectively • Production volume rose 0.3% to 59KMT in 2017 Q2 from 2017 Q1

  24. Key Product HighlightsMarket Dynamics for LLDPE Gross Margin Operating Margin • Operating margin slightly fell in 2017 Q2 from 2017 Q1 given lower ASP and higher SG&A

  25. Key Product Highlights#1 Producer of LLDPE in Taiwan 2018 Q1 Total Taiwan LLDPE Demand: 55,000 MT 2018 Q1 External Sales of LLDPE: NT$ 1,790 million • LLDPE annual production capacity is 264KMT with sales volume of 56KMT in 2017 Q2 • FPC commands a 42% market share in Taiwan in 2017 Q2 • Total demand in Taiwan for 2017 Q2 was 15.1% higher than 2017 Q1 • Taiwan sales accounted for 47% of total sales in 2017 Q2, with 9%, 21% and 15% of sales sold to Mainland China, SE Asia and South Asia (India most) respectively

  26. Key Product HighlightsMarket Dynamics for Acrylic Acid & Esters Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue fell 14.5% to NT$3.4 bn in 2017 Q2 from 2017 Q1 following ASP decreases • Sales volume rose 3.1% to 98KMT in 2017 Q2 from 2017 Q1 due to re-stocking demand in China market • ASP fell 17.1% in 2017 Q2 from 2017 Q1 due to sufficient supply in China and bearish propylene price

  27. Key Product HighlightsMarket Dynamics for Acrylic Acid & Esters Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 78.2% and 72.9% in 2017 Q2 and 2017 Q1 respectively • Production volume rose 7.2% to 131KMT in 2017 Q2 from 2017 Q1

  28. Key Product HighlightsMarket Dynamics for Acrylic Acid & Esters Gross Margin Operating Margin • Gross and operating margin fell in 2017 Q2 from 2017 Q1 due to lower ASP

  29. Key Product HighlightsSole Producer of Acrylic Acid & Esters in Taiwan 2018 Q1 Total Taiwan Acrylic Acid & Esters Demand: 58,000 MT 2018 Q1 External Sales of Acrylic Acid & Esters: NT$ 3,988 million • FPC is the sole producer of Acrylic Acid & Esters in Taiwan, with annual production capacity of 668KMT (Taiwan 268KMT/Y, Ningbo 400KMT/Y) • AE sales volume reached 98KMT in 2017 Q2 and commands a 71% market share in Taiwan • 12.7% of the production is consumed internally in 2017 Q2 • Total demand in Taiwan for 2017 Q2 was 9.8% higher than 2017 Q1 • Taiwan sales accounted for 33% of total sales in 2017 Q2, with 52% and 7% of sales sold to Mainland China and South Asia respectively

  30. Key Product HighlightsMarket Dynamics for SAP Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Sales (NT$Million) Volume (1000MT) • Revenue rose 36.1% to NT$1.2 bn in 2017 Q2 from 2017 Q1 following sales volume increases • Sales volume rose 36.2% to 35KMT in 2017 Q2 from 2017 Q1 due to new order from international diaper producers in Turkey • ASP fell 0.1% in 2017 Q2 from 2017 Q1

  31. Key Product HighlightsMarket Dynamics for SAP Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 70.3% and 50.3% in 2017 Q2 and 2017 Q1 respectively • Production volume rose 39.9% to 35KMT in 2017 Q2 from 2017 Q1 due to demand from Turkey market

  32. Key Product HighlightsMarket Dynamics for SAP Gross Margin Operating Margin • Gross and operating margin rose in 2017 Q2 from 2017 Q1 due to higher utilization rate

  33. Key Product HighlightsSole Producer of SAP in Taiwan 2018 Q1 Total Taiwan SAP Demand: 2,000 MT 2018 Q1 External Sales of SAP:NT$ 1,590 million • Annual production capacity is 200KMT (Taiwan 110KMT/Y； Ningbo 90KMT/Y) • SAP sales volume reached 35KMT in 2017 Q2 and commands a 56% market share in Taiwan • Total demand in Taiwan for 2017 Q2 was equal to 2017 Q1 • Taiwan sales accounted for 3% of total sales in 2017 Q2, with 19% of sales sold to Mainland China and 44% to Europe (Turkey most)

  34. Key Product HighlightsMarket Dynamics for NBA Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/KG) Sales (NT$Million) Volume (1000MT) • Revenue rose 87.5% to NT$684 mnin 2017 Q2 from 2017 Q1 due to sales volume increases • Sales volume rose 105.6% to 30KMT in 2017 Q2 from 2017 Q1 due to order from South America market • ASP fell 8.8% in 2017 Q2 from 2017 Q1 due to sufficient supply in China and lower propylene price

  35. Key Product HighlightsMarket Dynamics for NBA Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 85.7% and 101.2% in 2017 Q2 and 2017 Q1 respectively • Production volume fell 15.3% to 54KMT in 2017 Q2 from 2017 Q1 due to cut production to meet demand and unplanned shutdown during 6/19~6/21

  36. Key Product HighlightsMarket Dynamics for NBA Gross Margin Operating Margin • Gross and operating margin fell in 2017 Q2 from 2017 Q1 given lower ASP and utilization rate

  37. Key Product HighlightsSole Producer of NBA in Taiwan 2018 Q1 Total Taiwan NBA Demand: 26,000 MT 2018 Q1 External Sales of NBA:NT$ 692 million • Production capacity is 250KMT after the completion of production in 2008 Q4, the sole producer in Taiwan • NBA sales volume reached 30KMT in 2017 Q2 and commands a 86% market share in Taiwan • 28.1% of the production is consumed internally in 2017 Q2 • Total demand in Taiwan for 2017 Q2 was 5.3% higher than 2017 Q1 • Taiwan sales accounted for 9% of total sales in 2017 Q2, with 75% of sales sold to Mainland China

  38. Key Product HighlightsMarket Dynamics for AN Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue rose 45.8% to NT$3.2 bn in 2017 Q2 from 2017 Q1 given ASP and sales volume increase • Sales volume rose 31.3% to 69KMT in 2017 Q2 from 2017 Q1 due to planned shutdown for maintenance during 2/10~3/7 • ASP rose 11.0% in 2017 Q2 from 2017 Q1 due to tight supply given peers’ maintenance shutdown

  39. Key Product HighlightsMarket Dynamics for AN Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 97.5% and 82.7% in 2017 Q2 and 2017 Q1 respectively • Production volume rose 17.9% to 68KMT in 2017 Q2 from 2017 Q1 due to planned shutdown for maintenance during 2/10~3/7

  40. Key Product HighlightsMarket Dynamics for AN Gross Margin Operating Margin • Gross and operating margin rose in 2017 Q2 from 2017 Q1 given higher ASP and utilization rate

  41. Key Product Highlights#1 Producer of AN in Taiwan 2018 Q1 Total Taiwan AN Demand: 101,000 MT 2018 Q1 External Sales of AN: NT$ 2,980 million • AN sales volume reached 69KMT in 2017 Q2 and commands a 39% market share in Taiwan • 3.8% of the production in 2017 Q2 is consumed internally • Total demand in Taiwan for 2017 Q2 was 6.9% lower than 2017 Q1 • Taiwan sales accounted for 49% of total sales in 2017 Q2, with 19%, 11% and 7% sales sold to Mainland China, NE Asia and South Asia respectively

  42. Key Product HighlightsMarket Dynamics for MTBE Net Sales External Sales Vol. & Selling Price Volume (1000MT) Avg. Price (NT$/MT) Sales (NT$Million) • Revenue fell 2.5% to NT$913 mnin 2017 Q2 from 2017 Q1 given ASP decreases • Sales volume rose 8.5% to 49KMT in 2017 Q2 from 2017 Q1 due to on-seasonal demand • ASP fell 10.1% in 2017 Q2 from 2017 Q1 due to bearish crude oil price

  43. Key Product HighlightsMarket Dynamics for MTBE Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 116.4% and 113.4% in 2017 Q2 and 2017 Q1 respectively • Production volume rose 2.6% to 51KMT in 2017 Q2 from 2017 Q1

  44. Key Product HighlightsMarket Dynamics for MTBE Gross Margin Operating Margin • Gross and operating margin fell in 2017 Q2 from 2017 Q1 due to lower ASP

  45. Key Product Highlights#3 Producer of MTBE in Taiwan 2018 Q1 Total Taiwan MTBE Demand: 158,000 MT 2018 Q1 External Sales of MTBE:NT$ 944 million • Annual production capacity of MTBE is 174KMT after the completion of debottlenecking 23KMT in 2005 Q2 • MTBE sales volume reached 49KMT in 2017 Q2 and commands a 30% market share in Taiwan • Total demand in Taiwan for 2017 Q1 was 3.9% higher than 2017 Q1 • Fully supplied to affiliate Formosa Petrochemical as gasoline additives in 2017 Q2

  46. Key Product HighlightsMarket Dynamics for MMA Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue rose 31.0% to NT$1.25 bnin 2017 Q2 from 2017 Q1 given ASP and sales volume increase • Sales volume rose 19.0% to 19KMT in 2017 Q2 from 2017 Q1 due to planned shutdown for maintenance during 2/10~3/7 • ASP rose 10.1% in 2017 Q2 from 2017 Q1 due to tight supply given peers’ maintenance or outage

  47. Key Product HighlightsMarket Dynamics for MMA Production Volume Utilization Rate Volume (1000MT) • Utilization rate was 95.4% and 74.4% in 2017 Q2 and 2017 Q1 respectively • Production volume rose 28.1% to 21KMT in 2017 Q2 from 2017 Q1 due to planned shutdown for maintenance during 2/10~3/7

  48. Key Product HighlightsMarket Dynamics for MMA Gross Margin Operating Margin • Gross and operating margin rose in 2017 Q2 from 2017 Q1 due to higher ASP and utilization rate

  49. Key Product Highlights#2 Producer of MMA in Taiwan 2018 Q1 Total Taiwan MMA Demand: 43,000 MT 2018 Q1 External Sales of MMA:NT$ 1,177 million • Annual production capacity of MMA is 98KMT after the completion of debottlenecking in 2006 Q2 • MMA sales volume reached 19KMT in 2017 Q2 and commands a 28% market share in Taiwan • 8.7% of the production in 2017 Q2 is consumed internally • Total demand in Taiwan for 2017 Q2 was 2.1% lower than 2017 Q1 • Taiwan sales accounted for 58% of total sales in 2017 Q2, with 15% of sales sold to Mainland China and 13% to SE Asia

  50. Key Product HighlightsMarket Dynamics for ECH Net Sales External Sales Vol. & Selling Price Avg. Price (NT$/MT) Volume (1000MT) Sales (NT$Million) • Revenue rose 14.2% to NT$845 mnin 2017 Q2 from 2017 Q1 given sales volume increases • Sales volume rose 14.4% to 25KMT in 2017 Q2 from 2017 Q1 due to Epoxy demand from Nan Ya Plastics • ASP fell 0.2% in 2017 Q2 from 2017 Q1

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