Sun, May 01, 2011 - Page 11 News List

Hon Hai’s Q1 net profit down about 20% year-on-year

Staff writer, with CNA

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, saw its net profit for the first quarter of this year fall almost 20 percent from a year earlier because of higher operating costs.

In a statement released late on Friday, Hon Hai said it posted a profit of NT$14.4 billion (US$501 million), down 19.94 percent from the NT$17.99 billion recorded a year ago. Its operating expenses meanwhile rose 81.5 percent year-on-year to NT$19.16 billion.

The company, which manufactures iPhones and iPads for Apple, said it registered an earnings per share (EPS) of NT$1.49 for the January-March period, compared with NT$1.87 recorded a year earlier.

However, the first-quarter earnings were still better than what the market had previously expected. Earlier, Merrill Lynch had estimated Hon Hai’s EPS during the period would hit NT$1.38.

According to Hon Hai, its gross margin for the first quarter fell 4.52 percent from 4.72 percent a year earlier, while its operating margin was down 1.07 percent from 2.17 percent year-on-year.

While several brokerages, including Citigroup, Daiwa Securities and Merrill Lynch, have maintained their recommendation of a “buy” on Hon Hai shares, the stock has become a market laggard, as many investors were unhappy with its low dividend payout for last year.

On Friday, Hon Hai closed down 0.46 percent at NT$108.50, while the benchmark TAIEX fell 0.36 percent.

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