Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract manufacturer of electronics, posted a 15 percent increase in third-quarter profit as rising sales of Apple Inc iPhones and Dell Inc personal computers offset higher wages.
Net income rose to NT$21 billion (US$685 million) in the three months to Sept. 30, from NT$18.3 billion a year earlier, according to Bloomberg calculations based on nine-month earnings filed to the Taiwan Stock Exchange yesterday.
The average of 10 analyst estimates compiled by Bloomberg was for profit of NT$21.5 billion.
Based on the company’s monthly statements, its unconsolidated third-quarter revenue rose 72 percent to NT$664.45 billion from NT$385.85 billion a year earlier.
HIGHER WAGES
Hon Hai raised wages in China and began migrating plants inland to tackle labor problems that resulted in a spate of suicides earlier in the year. On Oct. 19, the company announced more than US$350 million of new China investments, including US$80 million for a tablet computer factory in Chengdu and at least US$50 million for a computer chassis plant in Huizhou.
“Despite the general uncertainty and a so-called challenging environment, under the backdrop of an increase weighting in the company’s consumer electronics business, the quarterly unconsolidated results were as expected and remain seasonal,” Hon Hai spokesman Edmund Ding (丁祈安) said in an e-mailed statement yesterday.
Hon Hai’s unconsolidated sales climbed 72 percent to NT$664 billion, according to Bloomberg calculations based on subtracting six-month earnings from the nine-month data.
Net income for the nine months to Sept. 30 climbed 19 percent to NT$55.7 billion, on a 63 percent increase in unconsolidated sales to NT$1.59 trillion, the company said in the exchange filing.
LOWER MARGIN
Gross margin was 4.6 percent in the first nine months, compared with 4.4 percent a year earlier.
Profit margin may improve from this quarter as clients accept higher manufacturing costs, Citigroup Inc said.
PRICE INCREASES
“Hon Hai managed to get price increases from clients because its chairman, Terry Gou (郭台銘), is giving senior management lower revenue targets, which allows them to demand price increases without worrying about revenue targets,” Kevin Chang (張凱偉), who rates Hon Hai a “buy,” wrote in an Oct. 8 report.
Hon Hai shares ended trading 0.43 percent lower at NT$116 on the Taiwan Stock Exchange yesterday before the earnings announcement.
The shares have lost 14 percent this year, lagging behind a 1.2 percent advance in the benchmark TAIEX.
Additional reporting by staff writer
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