Thu, Feb 28, 2019 - Page 11 News List

FIH warns of US$870m loss in 2018

Staff writer, with CNA

FIH Mobile Ltd (富智康), a Hong Kong-listed subsidiary 62.8 percent owned by Hon Hai Precision Industry Co (鴻海精密), on Friday last week issued a profit warning, saying that it is likely to report a net loss of US$870 million for last year, on top of a net loss of US$525 million in 2017.

FIH, which makes products for Xiaomi Corp (小米), Oppo Mobile Telecommunications Corp (歐珀) and Huawei Technologies Co (華為), posted a net loss of US$575 million in the first nine months of last year.

For the whole of last year, revenue grew 22.5 percent annually to more than US$14.8 billion, it said.

The deteriorating bottom line was partly due to an increase in foreign exchange-related losses, which could have hit about US$120 million last year, compared with a gain of US$19.51 million the previous year, the company said.

FIH said that it also suffered losses resulting from investments in listed companies that could have reached US$71 million last year.

In addition, the firm could report US$79.5 million in goodwill losses for last year and is expected to take a substantial impairment loss of up to US$78 million from its interest in a material associate.

FIH said that it expects to repair a fair value loss of up to US$44.8 million in its convertible notes.

The fair value loss extended from late 2017 into last year and is likely to continue this year, the profit warning said.

FIH’s heavy losses could cut Hon Hai’s earnings for last year by about NT$16.8 billion (US$545.9 million), analysts said.

Looking ahead, FIH said that operating expenses could be reduced this year, so downward pressure on its gross margin, which reflects the difference between revenue and cost of goods sold, is expected to ease.

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