Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, yesterday reported a 0.23 percentage points fall in its gross margin for the third quarter of this year from the previous quarter, as rising labor costs in China and higher raw materials prices worldwide continued to threaten the company’s profitability.
On a consolidated basis, the company’s gross margin was 7.05 percent in the three months ending Sept. 30, compared with 7.28 percent for the previous three months, Hon Hai said in an e-mailed statement yesterday.
The company posted an 8.08 percent in gross margin during the same period of last year.
OPERATING MARGIN
With lower operating expenses and no tax on retained earnings, Hon Hai said its operating margin improved to 2.2 percent in the third quarter from 2.01 percent in the second quarter, while net margin increased to 2.22 percent from 1.65 percent, according to the statement
In the third quarter, the company’s net income was NT$19.18 billion (US$636 million) on a consolidated basis, up 47.71 percent from NT$12.98 billion in the previous three months, but down 8.58 percent from NT$20.98 billion a year earlier.
CHINA EXPANSION
Earnings per share improved to NT$1.80 in the third quarter from NT$1.22 in the previous quarter, but were still lower than the NT$2.18 posted for the same period last year, which analysts attributed to the substantial costs incurred by the company’s expansion into inland China.
Net sales rose 9.84 percent to NT$863.2 billion in the third quarter from NT$785.9 billion in the second quarter, and up 1.96 percent from NT$846.71 billion a year ago, according to the Taiwanese maker of Sony Corp TVs, Hewlett-Packard Co printers and Apple Inc iPhones and iPads.
Looking ahead, Hon Hai spokesperson Edmund Ding (丁祈安) said in the statement that the company expected limited visibility over the short term.
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