Fri, Aug 14, 2015 - Page 13 News List

Hon Hai records its highest quarterly performance due to efficiency changes

By Lauly Li  /  Staff reporter

Hon Hai Precision Industry Co (鴻海精密), which assembles Apple Inc’s iPhone, yesterday reported net income of NT$25.68 billion (US$793.43 million), or NT$1.65 per share, for last quarter, marking the highest performance in the second quarter in the company’s history.

Last quarter’s profit beat JPMorgan Securities Ltd’s forecast of NT$22 billion by 16.72 percent and the company’s cumulative profit for the first half grew 41.01 percent to NT$56.07 billion from last year.

Earnings per share were NT$3.61 for the first six months, up from NT$2.56 billion the previous year, Hon Hai said in a statement.

Hon Hai’s quarterly result represents an annual growth of 27.25 percent, but a quarterly decline of 15.47 percent, which analysts attributed to undistributed earnings tax and the traditional slow season.

Gross margin grew 0.15 percentage points to 7.2 percent last quarter from last year, thanks to improved production efficiency and increasing industrial automation.

However, operating margins dropped 0.5 percentage points to 3.31 percent over the period, dragged down by higher expenses on research and development for new projects.

JPMorgan estimated a gross margin of 7 percent last quarter and an operating margin of 3.1 percent.

Component suppliers for Apple’s next-generation iPhone have started shipping parts to assemblers and it is predicted that Hon Hai’s revenue this month is likely to be relatively flattish from last month’s NT$312.19 billion, before seeing a significant jump next month.

While revenue this quarter might grow from last quarter’s NT$972.7 billion, JPMorgan analyst Gokul Hariharan said Hon Hai could face tougher competition in the second half and its year-on-year growth in revenue might be flat next quarter due to slower iPhone shipment growth compared with last year and possible share loss to Pegatron Corp (和碩) in Apple’s next-generation iPhone models.

“We expect Hon Hai to drop 3 percent in revenue in the second half of this year from a year ago,” Hariharan said in a note on Thursday last week.

In the first seven months of the year, Hon Hai’s cumulative revenue totaled NT$2.29 trillion, up 13.67 percent from a year ago.

Hon Hai shares closed 1.39 percent higher at NT$87.4 in Taipei trading, yesterday.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top