Hon Hai Precision Industry Co (鴻海精密), the major assembler of Apple Inc’s iPhones and iPads, plans to grow net profit and revenue by at least 10 percent annually this year, along with increasing margins, chairman Terry Gou (郭台銘) said yesterday.
The goal of 10 percent growth in revenue is much lower than the 15 percent increase Hon Hai has aimed for in past years, showing the company’s priority is shifting to profit enhancement rather than revenue expansion.
Internally, Hon Hai has set a more aggressive goal of boosting its net profit by as much as 15 percent this year, Gou said at the company’s annual general meeting.
Hon Hai is making efforts to improve its profitability by shifting from the manufacturing of slim-margin electronics to providing more value-added services, including assisting customers to design and sell products, or offering maintenance services, Gou said, citing its recent partnership with BlackBerry Ltd as an example.
The company is in the process of a multi-year restructuring plan, via which Hon Hai will transform itself into a company providing both technology and services, he said.
In response to a shareholder’s question about the company’s profits this year, Gou said he is confident that Hon Hai’s earnings per share this year will exceed last year’s NT$8.16.
Last year, Hon Hai’s net profit grew 12.73 percent to NT$106.7 billion (US$3.56 billion), compared with NT$94.64 billion, or NT$7.27 a share, in 2012. Net margin improved to 3.21 percent last year, from 2.98 percent in 2012.
Yesterday, shareholders approved the proposal to distribute a cash dividend of NT$1.8 and 12 percent of stock dividend per common share.
With a payout ratio of just 22 percent, it shows the company needs to preserve more capital for new investment projects, which are set to be unveiled in the second half of this year, Gou said, without disclosing details.
To fund new investment projects, the company also plans to issue less than 1 billion new common shares in the form of global depository receipts. The fundraising plan was approved by shareholders.
Hon Hai recently announced a merger plan with telecoms operator Asia Pacific Telecom Co (亞太電信) via share swap, eyeing the carrier’s fourth-generation (4G) bandwidth and its fiber-optical broadband network. Before that, Hon Hai spent NT$11.6 billion on subscribing to new shares of Asia Pacific at NT$20 per share via its telecoms subsidiary Ambit Microsystems Corp (國碁). Ambit has a 4G license.
Gou also talked about new potential investment projects, including building a new plant in central Taiwan to make electric car components, such as batteries, and to assemble such energy-efficient vehicles.
He declined to comment whether the investment aimed to make electric cars for Tesla Motors Inc.
Gou said the company plans to make affordable electric cars priced at US$15,000 per unit, rather than targeting high-end markets.
In a separate statement, Hon Hai said it has filed a patent infringement lawsuit in the US against Toshiba Corp, Funai Electric Co and Mitsubishi Electric Corp, via its subsidiary MiiCs and Partners.
Hon Hai said those companies have illegally used patents linked to making thin-film transistors used in LCD displays for TVs, monitors, notebook computers and smartphones.
Hon Hai said in the annual book that it was granted 2,279 new patents from US authorities last year.
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