FCFC — Call Transcript 2022

Aug 23, 2022

FORMOSA CHEMICALS &

FIBRE CORPORATION

1H2022 Result Conference

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FCFC
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AUG 24,2022

Disclaimer

• The information provided in the document, other than number and data of financial reports, has not been audited or reviewed by any accountant s or any independent third parties. 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)	1H2022	1H2021	HoH	2Q2022	1Q2022	QoQ
Sales Revenue	203.2	180	12.9%	107.8	95.4	13.0%
COGS	(187.3)	(145.5)		(101.1)	(86.2)
Gross Profits	15.9	34.5	(53.9%)	6.7	9.2	(27.2%)
Gross Margin	7.8%	19.2%		6.2%	9.6%
Operating Expense	(9.7)	(8.7)		(4.8)	(4.9)
Operating Profit	6.2	25.8	(76.0%)	1.9	4.3	(55.8%)
Operating Margin	3.1%	14.3%		1.8%	4.5%
Non-Operating Profit (Loss)	10.5	7.5	40.0%	6.7	3.8	76.3%
Profit Before Tax	16.7	33.3	(49.8%)	8.6	8.1	6.2%
Net Profit	14.8	27.9	(47.0%)	7.9	6.9	14.3%
Net Profit Margin	7.3%	15.5%		7.3%	7.2%
EPS(NTD)	2.11	4.32		1.08	1.03

3

Change in Consolidated Revenue –QoQ

(In NT$ billion)

 Sales Revenue

 Operation Income

Consolidated revenue increased 12.4 billion in 2Q2022, up 13% compared to 1Q2022.

 Price variance+8.7 billion :

95.4

107.8

Quotations of ABS and phenol were affected by Chinese cities’ lockdown and the weak demand. Aside from that, most of the products prices were pushed up as a result of the Russia Invasion.

 Volume variance+3.7 billion :

4.3

1Q2022

1.9

2Q2022

Mainly due to the improvement of the PX processing mar gin, the Aromatic plant increased the output shown a volu me variance +6.6 billion, while PTA and PP arranged regu lar inspections and its sales volume variance shown a -2.15 billion QoQ.

4

Change in Consolidated Revenue –YoY

(In NT$ billion)

 Sales Revenue

Consolidated revenue increased 23.2billion in 1H2022 compared with it in 1H2021, representing 12.9% growth rate.

• Operation Income

 Price variance+27.3 billion

180

203.2

Supply chain imbalance, coupled with the impact of the Russia n-Ukrainian war, pushed up oil and raw material prices, driving u p petrochemical products. While acetone, ABS, PC and acetic aci d are affected by China's restriction control and new production c apacity competition, caused weak demand and price decline

 Volume variance -4.2 billion

6.2 25.8

1H2021 1H2022

PX, phenol, PP, PIA(Mailiao), PTA(Ningbo) have a difference of -9.09 billion due to their regular inspections during this period. Sales volume variance of ABS, nylon, yarn and Vietnam's power shown a total -3.14 billion mainly due to the market factor. Ning bo PIA completed and put into production, the sales volume diffe rence was +4.61 billion. SM reduced its self-use ratio and increas ed external sales shown volume variance +3.8 billion.

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- Change in Profit Before Tax - QoQ

(In NT$ billion)

• Sales Revenue

Profit Before Tax increased 0.5 billion in 2Q2022 compared to 1Q2022, representing 6.2% growth rate.

• Profit Before Tax

95.4

8.1

1Q2022

107.8

8.6

2Q2022

 Operating income -2.4 billion Affected by the Russia Invasion and the supply chain imbalance, inflation got worse. Central banks raise inte rest rates to fight inflation, which has also raised concerns about the world’s economic downturn. Plus Chinese government’s Zero-Covid policy. Demands shrank and processing margin narrowed affecting the operating profit on a seasonal basis.

• Non-Operating income +2.9 billion

• 1) Dividend income increased by 2.87 billion. 2) Investment profit from Equity Method increased by 0.6 billion.

• 3) Foreign currency exchange profit decreased by 0.55 billion.

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- Change in Profit Before Tax - HoH

(In NT$ billion)

• Sales Revenue

• Profit Before Tax

Profit Before Tax was 16.7 billion, decreasing 16.6 billion compared with 1H2021, representing 49.8% decline rate.

180

33.3

203.2

16.7

 Operating income increased -19.6 billion The new of the continued to production capacity industry launch, the supply has increased, but the demand has slowed down due to inflation and the lockdown in mainland China. Customers were conservative in purchasing materials. The increase of is not as prices petrochemical plastic products high as that of raw materials.

• Non-Operating income increased +3 billion

• 1) Dividend income increased by 2.87 billion. 2) Foreign currency exchange profit decreased by 1.91 billion.

1H2021 1H2022

• 3) Investment profit from Equity Method increased by 1.78 billion.

7

Revenue Breakdown by Segment

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1H2021 1H2022
Petrochemicals 43.66% 51.53%
Plastics 35.47% 27.80%
Others 14.26% 14.13%
Formosa Taffeta
6.61% 6.54%
Co., Ltd.
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Petrochemical : In the first half of 2022, the company's petrochemical product revenue was 104.7, an increase of 26.1 billion compared with the same period in 2021, a growth rate of 33%, mainly due to oil prices raise, which also caused petrochemical product revenue accou nting for 51.53% of overall revenue, an increase from 43.66% in the same period of 2021. Plastics: In the first half of 2022, the revenue was 56.48 billion. Although the price of raw materials increased, due to the slowdown in demand and competition in the new production capacity of the industry, buyers shrank their hands, the price and volume of plastic products fell, a decrease of 7.38 billion compared with 63.85 billion in the same period in 2021, a decrease of 11.6%. Products accounted for 27.8% of overall revenue, down from 35.47% in the same period in 2021.

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Revenue Breakdown by Geography

1H21

Sales Revenue:NT$180billion

1H22

Sales Revenue:NT$203.2billion

China(HK,Mac included):42.0% Rest of Asia:11.3% Americas:3.7% Europe:0.9% Others:0.8% Overseas:58.7%

China(HK,Mac included):40.1% Rest of Asia:13.2% Americas:3.1% Europe:1.1% Others:1.6% Overseas:59.1%

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TW
Overseas
TW 36.0% Overseas 41.3%
58.7%
64.0%
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 China(Hong Kong and Macau included) is still our primary market, accounted for 40.1% of total revenue in 1H22, slight decreasing from 42.0% in the same period of 2021.

9

Operating Profits Breakdown by Division

Operating Profit % % change in Operating Margin

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200%
20%
17.5%
14.9%
27.1%
150% 15%
4.5% [10.7%] 1.1% 10.8%
100% 10%9.5% 9.0%
40.5%
49.6% 139.2% 6.3% 5.1%
46.2% 76.3% 103.6% 8.0%
50% 5%
63.7% 1.8% 2.7%
45.9% 43.1% 0.5%
22.6% 3.1% 3.4%
11.7% 1.5%
0% 0%
0.0%
-0.4%
-15.3% [-4.2%]
-1.9%
-50% -66.3% -5%
-4.4%
-10%
-100%
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
Petrochemicals Plastics Others Petrochemicals Plastics Others
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10

Capacity Expansion Plans

Taiwan(Chiayi)

Product Line Addition Current Expected (Group wide) Completion date Compound II 36KT 36KT 2024Q1 PS IV 100KT 640KT 2024Q4 China(Ningbo) Product Line Addition Current Expected (Group wide) Completion date ABS 250KT 950KT 2022Q3 PTA#6 1,500KT 2,900KT 2023Q3

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ESG Projects

 Energy conservation and carbon reduction programs Process optimization, recover waste heat and improve heat integration, improve energy efficiency.

Decarbonization

• Energy transition

Fuels transition, green power, equipment electrification.

• Recovery and reuse of CO2

• Employee electric scooter grant; replacing official vehicles with gasoline-electric hybrid vehicles.

• Waste fishing nets recycling project

• Circular Worked with clients to recycle and reprocess waste fishing nets into CPL to replace fresh raw materials.

Economy

• Recycled plastic products

• Eco-friendly yarn products

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Digitalization

• Factory simulation

• Digitalization of production and marketing management

• Comprehensive digital optimization and transformation

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

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