Hon Hai profits jump 58 percent

By Lisa Wang  /  Staff reporter

Wed, Nov 14, 2012 - Page 13

Hon Hai Precision Industry Co Ltd (鴻海精密), the major assembler of Apple Inc’s iPhones and iPads, yesterday posted 58 percent growth in quarterly profits for the last quarter.

The company also said its gross margin surged to its highest level in 11 quarters and reported a spike in non-operating income.

Net profits on a consolidated basis expanded to NT$30.26 billion (US$1 billion) in the quarter ending on Sept. 30, compared with NT$19.18 billion in the same period of last year, according to financial statements submitted by Hon Hai to the Taiwan Stock Exchange.

The figure indicates the company’s net profits have more than doubled from the NT$12.61 billion posted in the second quarter.

Gross margin rose to 9.54 percent last quarter, from 7.94 percent in the previous quarter, marking the highest level since the fourth quarter of 2009, when gross margin surged to 10.22 percent.

The improvement was driven by increased shipments of higher-margin servers and storage products.

Non-operating profit soared to NT$59 billion in the quarter from NT$1.75 billion in the same quarter previous year.

Operating margin improved to about 3.4 percent in the three-month period ending in September, from 2.41 percent in the second quarter, greatly exceeding the 2.7 percent estimated by Daiwa Capital Markets analyst Birdy Lu (呂嘉霖).

In the first nine months of the year, Hon Hai’s net profits expanded 24.12 percent year-on-year to NT$57.79 billion, or NT$4.9 per share, on a consolidated basis, compared with NT$46.56 billion, or NT$3.96 per share last year, according to the company’s financial statements.

Lu expected Hon Hai’s revenues to grow 20 percent quarter-on-quarter after the company ramped up production of Apple’s new products, the iPhone 5 and iPad mini.

Lu rated Hon Hai shares “buy” and set their target price at NT$120, implying that the share price would rise 37 percent in the next six months from the NT$87.7 seen yesterday.