Tue, Aug 30, 2011 - Page 12 News List

Hon Hai sees first-half net profits plunge

By Kevin Chen  /  Staff Reporter

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, yesterday reported a 21.2 percent drop in net income for the first half of this year from a year earlier.

On a non-consolidated basis, the company’s net income was NT$27.38 billion (US$943 million) in the first six months ending on June 30, compared with NT$34.74 billion at the same period last year, Hon Hai said in an e-mailed statement.

While net sales for the six months rose 27.77 percent from NT$929.3 billion to NT$1.19 trillion on a non-consolidated basis for the six months, gross margins fell from 4.6 percent to 3.8 percent.

On a consolidated basis, the company's net income was NT$27.34 billion in the first half, down 18.58 percent from NT$33.58 billion a year ago. Net sales rose 26.4 percent year-on-yeaer to NT$1.52 trillion from NT$1.2 trillion, while gross margin dropped from 8.4 percent to 7.3 percent, the statement showed.

In the second quarter, the company’s net income was NT$12.98 billion on a consolidated basis, down 9.86 percent from NT$14.4 billion in the previous three months, which Hon Hai attributed mainly to higher taxes on retained earnings as it paid NT$7.9 billion in income tax in the quarter, higher than NT$2.59 billion it paid in the previous quarter.

Net sales rose 7.77 percent to NT$785.94 billion in the second quarter from NT$729.26 billion in the first quarter, and gross margin sligtly improved to 7.3 percent in the second quarter from 7.2 percent, the company said.

“Despite the general uncertainty and a so-called challenging environment ... the quarterly unconsolidated results were as expected and remain seasonal,” spokesperson Edmund Ding (丁祈安) said in the statement.

However, “the visibility remains short yet,” he added.

Separately, the company said its board approved a plan to issue as much as NT$12 billion in non-collateral corporate bonds, according to a Taiwan Stock Exchange filing.

Hon Hai said it would use the proceeds from the bond sale to repay its short-term debt. The company has not set a date for the bond issue or its pricing, the filing showed.

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