Hon Hai Precision Industry Co (鴻海精密) yesterday said revenue this quarter would be flat from last quarter, despite new phone models launched by key customers, as the market faces weakening demand.
The iPhone assembler, based in New Taipei City’s Tucheng District (土城), said it is cautious about its business outlook, given mounting uncertainty regarding geopolitical tensions, soaring inflation and COVID-19 flare-ups, but still expects revenue this quarter to be higher than the NT$1.4 trillion (US$46.67 billion) it reported a year earlier.
The forecast came as the company posted record second-quarter net profit of NT$33.29 billion, up 12 percent year-on-year from NT$29.78 billion.
Revenue last quarter expanded 12 percent to NT$1.51 trillion, defying the effects of China’s COVID-19 lockdowns and supply chain constraints.
Earnings per share rose to NT$2.4 last quarter, up from NT$2.15 a year earlier and NT$2.12 a quarter earlier.
Gross margin rose to 6.4 percent last quarter, compared with 6.02 percent in the first quarter and 6.03 percent in the second quarter last year.
Photo: screen grab from the Internet
Hon Hai expects gross margin to trend up further in the second half of this year.
With clearer visibility for the remainder of this year, Hon Hai expects revenue this year to increase from last year, rather than the flat performance it forecast in May.
“An upgraded smart consumer electronics outlook is the main reason driving the upgrade for our full-year revenue outlook,” Hon Hai chairman Young Liu (劉揚偉) told an online investors’ conference.
Smart consumer electronics, smartphones primarily, are Hon Hai’s largest revenue contributor.
This year, revenue from cloud-based network devices and computing products would grow from last year, the company said.
“Although there is concern about data center demand lately, our customers still show rising demand for servers, especially from cloud service providers. This segment remains the most promising area this year,” Liu said. “We expect double-digit percentage growth this year on an annual basis.”
In response to investors’ questions about Hon Hai’s electric vehicles business, Liu said the company expects to add five new customers, including two from traditional automakers and three from auto start-ups.
Hon Hai on Tuesday signed a new deal with Monarch Tractor to make electric tractors and battery packs at Hon Hai’s Ohio facilities, starting in the first quarter of next year.
The company expects to fully utilize the Ohio plant in 2024. The facilities have an installed capacity of 600,000 units a year.
With new orders coming in, Hon Hai is confident that its target of gaining a 5 percent share of the world’s electric vehicle market by 2025 is achievable, Liu said, adding that, by that time, Hon Hai’s electric vehicle revenue would hit NT$1 trillion.
Liu said that Hon Hai’s investment in China’s Tsinghua Unigroup (紫光集團) was purely a financial investment, as Tsinghua Unigroup started making decent profits following corporate restructuring and after spinning off memorychip makers Yangtze Memory Technologies Co (長江存儲) and Wuhan Xinxin Semiconductor Manufacturing Co (武漢新芯).
Hon Hai has a contingency plan if regulators block the investment, Liu added.
The Investment Commission yesterday said it is in the process of reviewing Hon Hai’s 5.38 billion yuan (US$798.5 million) investment project.
The commission has asked Hon Hai to submit more information and assist in clarifying the complicated investment structure involved.
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