Taiwan’s listed firms incur large foreign exchange losses in 2016

Taipei--Enterprises listed in the local equity market incurred massive foreign exchange losses in 2016, when the Taiwan dollar appreciated about 2.44 percent against the U.S. dollar, according to the Financial Supervisory Commission (FSC).

Citing data, the FSC, the top financial regulator in Taiwan, said that the local business sector posted more than NT$130 billion (US$4.28 million) in foreign exchange losses after the Taiwan dollar stopped a three-year losing streak against the greenback last year.

The data showed that the financial sector suffered about NT$122 billion in foreign exchange losses, making up some 90 percent of the total suffered by local listed companies, as life insurers in Taiwan owned a large chunk of foreign currency denominated assets overseas.

When the value of the assets overseas was converted into the Taiwan dollar, the strength of the local currency led these life insurers to book significant foreign exchange losses.

After the financial sector, the FSC said, the trading and consumer goods industry posted the second highest foreign exchange losses of NT$6.7 billion in 2016, followed by the computer/computer peripheral sector, which incurred NT$1.4 billion in foreign exchange losses.

Despite the large losses, the FSC said, the combined pre-tax profit of the listed companies on the main board and the OTC market rose 2.24 percent from a year earlier to NT$2.33 trillion in 2016.

In particular, listed companies on the main board recorded NT$2.21 trillion in pretax profit in 2016, up 2.25 percent from a year earlier, the FSC added.

The stronger bottom line reflected a spike in prices in the petrochemical, utility and steel sectors, while strong demand in the global semiconductor sector also drove their earnings higher, according to the FSC.

A stronger Taiwan dollar remained a concern in the business sector as the currency appreciated more than 6 percent against the U.S. dollar in the first quarter of this year, market analysts said.

For example, Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., reported NT$1.14 billion in foreign exchange losses during the January-March period, higher than an earlier market estimated loss of NT$800 billion to NT$900 million, which shaved about NT$8 from its earnings per share.

In the first quarter, Largan's EPS stood at NT$36.41, down 42 percent from a quarter earlier. In addition to the large foreign exchange losses, slow season effects also affected Largan's profitability.

Source: Focus Taiwan News Channel