Thu, Jun 27, 2013 - Page 13 News List

Gou stays upbeat on Hon Hai’s future

PERIOD OF CHANGE:Hon Hai said it plans to spin off more businesses in the next few years, following a decision to separate its connector-manufacturing unit

By Lisa Wang  /  Staff reporter

Hon Hai chairman Terry Gou yesterday gestures as he speaks at the company’s annual general meeting in Tucheng District, New Taipei City.

Photo: Ashley Pon, Bloomberg

Hon Hai Precision Industry Co Ltd (鴻海精密) yesterday said profits this year would grow beyond last year’s record level, in spite of a slew of forecasts by analysts expecting cuts in shipments of Apple Inc’s iPhone this year.

Last year, Hon Hai, which assembles iPhones and iPads, posted a record-breaking net profit of NT$94.76 billion (US$3.14 billion), or NT$8.03 per share.

“Hon Hai’s fundamentals do not change. Hon Hai’s business will continue to grow,” Hon Hai chairman and chief executive Terry Gou (郭台銘) told shareholders at the company’s annual general meeting in Tucheng District, New Taipei City (新北市).

“No matter how the world economy performs, I guarantee Hon Hai’s earnings per share [EPS] will exceed last year’s,” he added.

“I’m also confident [in the firm’s business momentum] over the next two to three years,” Gou said.

The company’s core business, at least, would continue to grow over the next decade, he added.

In a stark contrast to Gou’s bullish view, most analysts forecast the company’s net profits would take a dive because of weak demand for iPhones from its biggest client.

Hon Hai’s EPS are likely to plummet to NT$5.87 this year, a Taipei-based analyst forecast.

“The likelihood of making more profits this year is slim,” said the analyst, who declined to be named.

“The problem at stake for Hon Hai is how to get new orders to fill the gap left by Apple,” the analyst said. “Apple accounts for a big chunk of Hon Hai’s revenue.”

Gou said that while it would be a challenge for Hon Hai to hit a revenue growth target of 15 percent annually in light of a struggling global economy, the company would make every effort to reach that goal.

Last year, Hon Hai’s revenue grew 13.11 percent to NT$3.91 trillion from 2011’s NT$3.45 trillion, hitting an all-time high.

The company also told shareholders that it plans to spin off more businesses in the next few years following a decision to separate its connector-manufacturing unit next month, as part of efforts to focus on its core business.

Hon Hai plans to list the connector unit by the end of this year.

The connector unit has targeted increasing its annual revenue to about NT$100 billion, which would make it the world’s No. 1 connector maker, Gou said.

Last year, the unit made about NT$80 billion in revenue, accounting for about 2 percent of Hon Hai’s revenue, Gou said.

Hon Hai also plans to list two of its fully owned subsidiaries within the next two to three years in Taiwan or in China.

The companies include CNTouch (天津富納源創科技) and a company making tapes and glues.

CNTouch, based in Tianjin, China, makes carbon nanotubes that can be used in touch displays, cables and LED lights.

Meanwhile, Gou said talks with Sharp Corp to buy a 9.9 percent stake in the Japanese company are still ongoing, but progress has been delayed by Sharp’s management reshuffle, he said.

Hon Hai shareholders approved a proposal to boost cash dividends by NT$0.5 per common share from a management plan of issuing NT$1.5 per share.

In addition, the company will distribute 5 percent per share as a stock dividend.

The company’s shares rallied 3.99 percent to NT$73, outperforming the TAIEX, which gained 1.59 percent yesterday.

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