FCFC — Call Transcript 2020

Aug 25, 2020

FORMOSA CHEMICALS &

FIBRE CORPORATION

2020H1 Result Conference

==> picture [71 x 34] intentionally omitted <==

----- Start of picture text -----

FCFC
----- End of picture text -----

==> picture [62 x 31] intentionally omitted <==

AUG 26,2020

Disclaimer

• The information provided in the document, other than number and data of financial reports, has not been audited or reviewed by any accountant or any independent third party. FCFC does not ensure the fairness, completeness and accuracy of the information.

 This document may contain forward-looking statements, including but not limited to statements that address activities, events or developments that FCFC expects or anticipates to occur in the future. All statements are based on FCFC’s plan and best knowledge toward the future while subject to various factors and uncertainness beyond FCFC’s control. Therefore, the actual results may differ materially from those contained in the forward-looking statements.

 This document does not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments.

• This material must not be copied, reproduced, distributed or passed to others at any time, in whole or in part, without the prior written consent of FCFC.

2

Consolidated Financial Performance

(Amount: NT$ billion)	1H2020	1H2019	HoH	2Q2020	1Q2020	QoQ
Sales Revenue	120.4	168.8	(28.7%)	56.0	64.4	(13.1%)
COGS	(112.8)	(148.0)		(50.0)	(62.8)
Gross Profits	7.6	20.8	(63.5%)	6.0	1.6	275.0%
Gross Margin	6.3%	12.3%		10.7%	8.1%
Operating Expense	(7.0)	(7.7)		(3.4)	(4.0)
Operating Profit	0.6	13.1	(95.4%)	2.6	2.0	230.0%
Operating Margin	0.5%	7.8%		4.6%	2.8%
Non-Operating Profit (Loss)	(2.7)	6.4	(142.3%)	(0.6)	(2.1)	71.4%
Profit Before Tax*	(2.1)	19.5	(110.8%)	2.0	(4.1)	148.8%
Net Profit	(2.5)	16.9	(114.8%)	1.8	(4.3)	141.9%
Net Profit Margin	(2.1%)	10.0%		3.2%	(6.7%)
EPS(NTD)	(0.59)	2.35		0.2	(0.79)

*Exempted the Income from Formosa Advanced Tech(as Formosa Taffeta lose its control on Dec.16, 2019), which is reclassified as NI from the discontinued segment and included in company’s total NI set out above.

3

Change in Consolidated Revenue –QoQ

(In NT$ billion)

 Sales Revenue

 Operation Income

64.4

56.0

2.6

-2.0

Consolidated revenue decreased 8.4 bn in 2Q2020 compared with 1Q2020, representing 13.1% decline rate.

 Price variance-9.37bn :

Prices for petrochemicals and plastics products plummeting in 2Q2020 due to ongo ing pandemic and tumbling crude oil price.  Volume variance+0.91bn : Sales volume increase in 2Q2020 due to the resuming operations of downstream factories in China along with the rising demand of ABS, PS, PP, PTA, PIA.

1Q2020

2Q2020

4

Change in Consolidated Revenue –HoH

(In NT$ billion)

 Sales Revenue

Consolidated revenue decreased 48.4 bn in 1H2020 compared with 1H2019, representing 28.7% decline rate.

 Operation Income

 Price variance -34.44bn

168.8

120.4

0.6

13.1

1H2019 1H2020

Except the price of acetone is on the rise with its strong demand for the end-use in hand sanitizers and protective sheets, most of petrochemicals ,plastics and textiles products were as demand shrank . price drop  Volume variance-13.98bn Except the sales volume of PTA and phenol and acetone were rise due to turnaround in 1H2019 and the demand for epidemic prevention end-use, respectively, most products sales volume were drop in 1H2020 as demand shrank . 5

- Change in Profit Before Tax - QoQ

(In NT$ billion)

 Sales Revenue

Profit(Loss) Before Tax increased 6.1 bn and turn out of the red in 2Q2020 compared with 1Q2020.

 Profit Before Tax

64.4

56.0

2.0

 Operating income increased 4.6 bn As high-priced inventories consumed and the operating rates of factories in China rising, the profit margin increased in Q2.  Non-Operating income increased 1.5 bn 1.Cash dividend increased 1.08 bn. 2.Equity income increased 0.34 bn.

-4.1

1Q2020

2Q2020

6

- Change in Profit Before Tax - YoY

(In NT$ billion)

 Sales Revenue

 Profit Before Tax

Profit(Loss) Before Tax decreased 2.1 bn in 1H2020 compared with 1H2019, representing 110.8% decline rate.

168.8

19.5

1H2019

120.4

-2.1

1H2020

 Operating income decreased 12.5 bn Operating income decreased in 1H2020 result in a significant decline both in sales price and sales volume due to plummeting crude oil prices and weakening demand amid the pandemic.

 Non-Operating income decreased 9.1bn 1.Equity income decreased 7.7 bn. 2.Dividends income decreased 0.82 bn. 3.Exchange Gain decreased 0.72 bn.

7

Revenue Breakdown by Division

1H2019

==> picture [663 x 279] intentionally omitted <==

----- Start of picture text -----

1H2019 1H2020
Petrochemicals 41.30% 40.50%
Plastics 30.30% 32.10%
Others 17.60% 18.40%
Formosa Taffeta
10.80% 9.00%
Co., Ltd.
----- End of picture text -----

• Petrochemical : Sales of petrochemical products in 1H2020 of 48.8 bn, accounted for 40.5% of revenue, a decrease of 22.8 bn from the same period of 2019 due to the impact of pandemic and the drops in oil prices.

• Plastics: Sales of plastic product in 1H2020 of 38.6 bn, a decrease of 26% from 52.5 bn of the same period a year ago due to the demand shrank amid pandemic.

 Sales of petrochemical and plastics products accounted for 72.6% of consolidated rev enue in 1H2020.

8

Revenue Breakdown by Geography

1H2019

Sales Revenue:NT$168.8 billion

1H2020

Sales Revenue:NT$120.4 billion

China(HK, Mac included):45.6% Rest of Asia:12.7% Americas:1.3% Europe:0.4% Others:0.4% Overseas:60.4%

China(HK,Mac included):45.6% Rest of Asia:15.9% Americas:1.2% Others:1.0% Europe:0.3% Overseas:64.0%

==> picture [262 x 152] intentionally omitted <==

----- Start of picture text -----

TW,
39.6%
Overseas
, 60.4%
----- End of picture text -----

==> picture [276 x 150] intentionally omitted <==

----- Start of picture text -----

TW,
36.0%
Overseas
, 64.0%
----- End of picture text -----

 China(Hong Kong and Macau included) is still our primary market and accounted for 45.6% both in 1H2020 and 1H2019 of total sales.

9

Operating Profits Breakdown by Division

Operating Profit %

% change in Operating Margin

==> picture [683 x 372] intentionally omitted <==

----- Start of picture text -----

19.3% 51.8%
150%
12%
1.5% 10.8%
36.8% 29.2%
10%
100%
19.6% 4.2%
9.2%
8%
50% 78.9% 34.8% [34.9% 109.4%] 93.9% 6% 5.3% 5.1% 5.2%
60.7% 5.7%
28.4% [35.9%]
4% 2.7%
0% 2.3% 2.4%
-28.7%
-45.7%
2% 1.4%
2.8% 0.4%
0.2%
-50%
0%
0.1%
-164.9% 0.9% -0.7%
-2%
-100%
-3.4%
-4%
-150%
-6% -6.5%
-8%
-200%
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
Petrochemicals Plastics Others Petrochemicals Plastics Others
----- End of picture text -----

10

Capacity Expansion Plans

China(Ningbo)

==> picture [57 x 48] intentionally omitted <==

MX/PIA

Capacity: Addition 135 KT/200 KT Completion date:2020/Q4 Phenol/Acetone

Capacity: Current 300 KT/185KT Addition 100KT/ 61KT Completion date:2020/Q4

PTA

Capacity: Current 1,200 KT Addition 1,500 KT Completion date:2022/Q2

ABS

Capacity: Current 500 KT Addition 250 KT Completion date:2021/Q4

11

Q&A

To Learn more about FCFC, Please visit www.fcfc.com.tw

==> picture [780 x 39] intentionally omitted <==