Sat, Aug 12, 2017 - Page 12 News List

Hon Hai profits fall short of expectations

By Lisa Wang  /  Staff reporter

Hon Hai Precision Industry Co Ltd (鴻海精密), which assembles Apple Inc’s iPhones, yesterday said its net profit last quarter inched up 1 percent annually, primarily due to weaker non-operating gains, including foreign-exchange income.

Net profit rose to NT$17.88 billion (US$589 million) during the quarter that ended on June 30, compared with NT$17.69 billion in the second quarter last year. That translated into earnings per share of NT$1.03, up from NT$1.02.

Operating income rose 19.83 percent year-on-year to NT$24.95 billion from NT$20.82 billion, with operating margin rising to 2.71 percent from 2.26 percent, the company’s financial statement showed.

However, non-operating profit sank to NT$700 million, compared with NT$10.42 billion a year earlier, the statement said.

Last quarter’s net profit fell short of analysts’ expectations.

Daiwa Capital Markets Inc’s Kylie Huang (黃奎毓) forecast that Hon Hai would post NT$19.5 billion profit last quarter, while Vincent Chen (陳豊丰) of Yuanta Securities Investment Consulting Co (元大投顧) predicted it would be NT$22.4 billion.

Hon Hai’s gross margin climbed to 6.81 percent from a three-year low of 6.02 percent in the second quarter of last year thanks to improving yield rate for its production lines, the company said.

The figure surpassed Chen’s estimate of 6.6 percent and Huang’s 6.8 percent.

In the first half of the year, Hon Hai saw total profit increase 1.74 percent year-on-year to NT$46.05 billion from NT$45.26 billion, hitting the highest level in two years.

As Apple’s new iPhones are expected to hit the shelves later this quarter, Huang projected Hon Hai’s revenue would grow about 22 percent to NT$1.12 trillion from NT$922 billion last quarter.

Hon Hai is the sole supplier of iPhone 8 smartphones, Huang said.

On Thursday, Hon Hai said revenue for last month grew 7.53 percent annually to NT$315.05 billion, but the number was down 0.03 percent monthly as the decline of its communications segment offset mild growth in consumer electronics.

Shares in Hon Hai rose 0.43 percent to close NT$116.5 in Taipei trading ahead of the company’s release of its latest financial results, outperforming the TAIEX, which ended flat.

Meanwhile, shares of General Interface Solution Holding Ltd (GIS, 業成), a touchpanel manufacturing arm of Hon Hai, soared 6.51 percent to close at NT$311 after news of the stock’s inclusion into the MSCI Global Standard Indices.

On Thursday, MSCI Inc said in a statement that it had added GIS into the indices following a quarterly review, removing the stock from the MSCI Global Small Cap Indices.

MSCI said it has also raised the weighting of GIS, a supplier to Apple, in its indices by 0.29585, the largest upgrade among the eight Taiwanese stocks for which the index provider hiked their weighting.

Analysts said that the upgrade reflects a strong showing of GIS shares in recent sessions amid optimism toward its shipments in the second half of this year due to the anticipated iPhone launch.

Analysts said that strong buying in GIS shares also reflects a plan by the company to launch production of organic light-emitting diode screen modules in the second half of this year with a capacity of 600,000 units per month.

Additional reporting by CNA

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