Thu, May 16, 2019 - Page 11 News List

Hon Hai shares fall on disappointing first-quarter results

By Natasha Li  /  Staff reporter

Hon Hai Precision Industry Co (鴻海精密), a major assembler of Apple Inc’s iPhones, yesterday saw its share price fall 2.38 percent to NT$77.8 after the firm on Tuesday reported disappointing results for the first quarter.

Gross margin slipped to 5.53 percent from 6.19 percent in the same period last year and operating margin declined by 0.86 percentage points to 1.53 percent, while net margin fell by 0.46 percentage points to 1.88 percent, Hon Hai said in a statement.

Net income for the first quarter dropped to its lowest level in five years at NT$19.83 billion (US$637.42 million), but earnings per share rose 2.88 percent annually to NT$1.43 thanks to a 20 percent capital reduction. First-quarter revenue rose 2.5 percent to NT$1.05 trillion over the period, the company said.

Hon Hai did not provide further details or an explanation for the disappointing results.

Market analysis firm Canalyst in a report last month estimated that shipments of iPhones in China dropped 30 percent to 6.5 million units in the first quarter, from 9.3 million units a year earlier.

Hon Hai chairman Terry Gou (郭台銘) earlier said that the company was moving its production lines to India amid the US and China trade spat.

The company is also moving production sites to Taiwan, Mexico, the US and Vietnam, he said.

“In addition to the ugly first-quarter results, investors have cut their holdings in Hon Hai in recent sessions amid worries over the company’s future without chairman Terry Gou,” Mega International Investment Services Corp (兆豐國際投信) analyst Alex Huang (黃國偉) told the Central News Agency.

Gou last month announced that he would take part in the Chinese Nationalist Party’s (KMT) presidential primary.

Last week, he said that he would not seek the Hon Hai chairmanship at a board meeting scheduled for next month.

“Gou is a dominant figure in Hon Hai, completely dictating the company’s business direction. So, his decision not to continue as chairman has raised concerns about the company,” Huang said.

Additional reporting by CNA

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