Hon Hai Precision Industry Co (鴻海精密), which has been battling falling profitability amid the global recession, cut its proposed dividend payment to shareholders by 48.9 percent and will not offer compensation to its board of directors for last year.
In a stock exchange filing submitted late on Friday, Hon Hai said its board had approved a proposal to distribute NT$2.30 in dividends per common share for last year’s performance — NT$0.80 in cash and 15 percent in stock.
That compares with its distribution of NT$4.50 and NT$5 in dividends in the previous two years, making it the company’s lowest payout since 1994, Hon Hai’s financial reports shows.
It was also much lower than market expectations that it would pay out NT$5 in dividends, a client note issued by SinoPac Securities Corp (永豐金證券) on Thursday said.
With the stock closing at NT$75.40 on Friday, Hon Hai’s proposed cash dividend of NT$0.80 — subject to shareholder approval — translates into a dividend yield of 1.06 percent.
In comparison, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, offers a dividend yield of 6.19 percent based on its proposed distribution of NT$3 in cash dividends and its share price of NT$48.50 on Friday.
Hon Hai did not specify the cause for the dividend cut in the filing. It did not return a Taipei Times e-mail asking for comment yesterday.
The Chinese-language Economic Daily News yesterday quoted company spokesman Edmund Ding (丁祈安) as saying that Hon Hai would be prudent in using its cash flow amid the economic uncertainty.
EARNINGS REPORT
The company’s cut in dividend payout came on the same day it reported that net profit dropped 29 percent to NT$55.13 billion (US$1.59 billion), or NT$7.44 in earnings per share, last year, from NT$77.69 billion a year earlier, a separate filing said.
Revenue rose 19.2 percent to NT$1.47 trillion from NT$1.24 trillion a year ago, while gross margin dropped to 4.1 percent last year from 4.8 percent in 2007, the company said.
After subtracting the NT$45.3 billion in profits that the company made in the first three quarters of last year, Hon Hai earned NT$9.3 billion in the fourth quarter, which represented a sharp drop of 88.7 percent from the NT$26.56 billion the company made a year earlier and far below Citicorp’s estimate of NT$15.81 billion.
Hon Hai makes game consoles for Sony Corp, personal computers for Hewlett-Packard Co and Apple Inc’s iPhones.
The company did not provide a sales guidance in its statement. Chairman Terry Gou (郭台銘) said on Thursday that a recent influx of rush orders were positive to the company’s business, but order visibility remained low at only two months.
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