Hon Hai closes year on a positive note

RECORD-HIGH PROFITS::A robust fourth quarter lifted the iPhone assembler’s full-year results, thanks to improving production efficiency, yields and cost management

By Lauly Li  /  Staff reporter

Sat, Apr 01, 2017 - Page 12

Hon Hai Precision Industry Co (鴻海精密), a key assembler of Apple Inc products, yesterday reported a record-high net income of NT$148.66 billion (US$4.9 billion) for last year, expanding by 1.22 percent from NT$146.86 billion a year ago.

The full-year results came as a surprise, as the company’s cumulative net profit in the first three quarters of last year plunged 14.94 percent year-on-year to NT$79.89 billion. Higher-than-expected earnings in the final quarter more than made up for disappointing results in the previous quarters.

Earnings per share were NT$8.6 last year, down from NT$9.42 the year before, as stock dividend distribution increased the company’s common shares by 10 percent to 170 billion.

The company’s consolidated revenue fell 2.81 percent to NT$4.35 trillion last year, its first annual contraction since its listing on the Taiwan Stock Exchange in 1991.

However, gross margin grew 0.23 percentage points annually to 7.38 percent last year and operating margin rose 0.35 percentage points to 4.01 percent, thanks to improving production efficiency, yields and costs management, Hon Hai said.

Hon Hai shares dropped 0.44 percent to close at NT$91 in Taipei trading, ahead of the release of its latest financial results. The stock has risen 8.55 percent this year on the Taiwan Stock Exchange.

“Robust demand for communication, consumer electronics and computing products during the peak season were the major growth engines last quarter,” a Hon Hai official said by telephone.

“Sharp’s net income of ¥4.2 billion [US$38 million] last quarter also contributed several digits to Hon Hai’s non-operating income of NT$10.88 billion in the quarter,” the official said.

Hon Hai holds a 44.5 percent stake in Sharp, while its metal casing subsidiary Foxconn Technology Co (鴻準) owns a 13 percent share in the Japanese firm.

Fourth-quarter net income grew 29.91 percent year-on-year and 98.58 percent quarter-on-quarter to a record NT$68.77 billion.

An analyst, who declined to be named, said the robust market response to the larger-sized iPhone 7 Plus, for which Hon Hai is the major assembler, was the main contributor to Hon Hai’s earnings last quarter.

The analyst expects Hon Hai’s revenue to be between NT$950 billion and NT$960 billion this quarter, a marginal change from NT$958 billion a year earlier, due to seasonal factors.

JPMorgan Securities Ltd on Thursday raised its iPhone shipment forecast to 260 million units next year from its previous estimate of 245 million units, citing “a strong feature upgrade and robust replacement demand.”

JPMorgan said in a report that the combined revenue of iPhone assemblers could grow by 25 percent next year due to higher sales prices for the new sets, which are expected to hit the market this fall.

“Among the iPhone assemblers, we see Hon Hai as the key beneficiary due to its stabilizing market share in Apple and 100 percent order allocation in the iPhone OLED model,” JPMorgan said.

Hon Hai is also in the race to gain more orders of components for dual cameras, 3D sensing and wireless charging devices over the next two years, the brokerage said.