Thu, Nov 14, 2019 - Page 12 News List

Hon Hai profit soars on iPhone 11 demand

NEW TRACKS:The firm is eyeing opportunities in three industries — electric vehicles, digital health and robotics — as it seeks to boost its profitability

By Natasha Li  /  Staff reporter

Hon Hai Precision Industry Co chairman Young Liu, center, speaks in an investors’ conference at the company’s headquarters in New Taipei City’s Tucheng District, as vice chairman Li Jie, left, and chief financial officer Huang De-cai look on.

Photo: CNA

Hon Hai Precision Industry Co (鴻海精密), the biggest assembler of Apple Inc’s iPhones, yesterday posted an 80 percent quarter-on-quarter increase in net profit for last quarter to NT$30.66 billion (US$1 billion), backed by robust sales of the iPhone 11 series.

That translates into earnings per share of NT$2.21, compared with NT$1.23 the previous quarter.

The company also benefited from subsidiary FIH Mobile Ltd’s (富智康) turnaround.

FIH makes products for Xiaomi Corp (小米), Oppo Mobile Telecommunications Corp (歐珀) and Huawei Technologies Co (華為), Hon Hai said.

FIH posted a net profit of US$20.03 million last quarter following net losses of US$84.08 million in the first half of the year, Hon Hai said.

In the July-to-September quarter, Hon Hai posted a 20 percent sequential increase in revenue to NT$1.39 trillion, while gross margin and operating margin improved slightly to 6.01 percent and 2.41 percent respectively.

Speaking at an investors’ conference at the company’s headquarters in New Taipei City’s Tucheng District (土城), Hon Hai chairman Young Liu (劉揚偉) vowed to boost the company’s gross margin from 6 percent to 10 percent within the next three to five years as it looks to expand into three industries.

“We are targeting electric vehicles, digital health and robotics as the three industries are estimated to reach US$1.2 trillion to US$1.3 trillion by 2025,” Liu said, adding that the compound annual growth rate is estimated at 20 percent.

Hon Hai aims to capture a market share of up to 10 percent in each of the three industries by investing about NT$10 billion per year, while increasing capital expenditure to about NT$65 billion, he said.

Underlining the company’s ambition to transform itself into a wholly digital company, Liu said Hon Hai would focus on improving core technologies, such as artificial intelligence, semiconductors, and 5G and 6G-related applications.

Providing a moderate outlook for this quarter, Liu said the company’s consumer and smart product segment, which contributed 49.2 percent to overall revenue last quarter, would improve on a quarterly basis, but decline on an annual basis because of a high comparison base last year.

Sales within the segment are nonetheless expected to increase next year, Liu said, assuming that the US-China trade dispute would settle down and no longer be a factor.

Liu added that the company has 16 main production sites across the globe, “which are ready to be expanded on clients’ demand.”

The company in September partnered with Apple to invest US$1 billion in India to expand local production of iPhones, and last month started production of the iPhone XR at its plant near Chennai, media reports said.

Liu also holds high hopes for Hon Hai’s corporate product segment, including servers and networking products, the company’s second-most important segment in terms of revenue (22.9 percent), with sales forecast to grow by 5 to 10 percent next year.

“5G deployment is going to be big next year ... but before that, a lot of infrastructure needs to be ready,” Liu said, adding that demand for such infrastructure would drive business growth.

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