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Foxconn Earnings Below Estimates

Mobile phone parts manufacturer and key Apple partner Foxconn Technology Group (listed as Hon Hai Precision Industry Co., Ltd) has reported a decline in earnings for the April-June quarter, surprising observers.

Despite revenue continuing to grow 17.03 per cent year-on-year to 1.07 trillion New Taiwan dollars (AUD$47 billion) last quarter, profit dropped 2.18 per cent on the year and 27.37 per cent on the quarter to NT$17.49 billion (AUD$780 million). The net profit represents Foxconn’s lowest earnings since Q3 2013.

Last year, net profit reached NT$17.9 billion (AUD$799 million).

Net profit this year had been estimated to reach NT$21.936 billion (AUD$976 million), well above the net profit they actually reached.

While Apple did well in its most recent reports, the growth came from services offered rather than selling devices, which blocks Foxconn from cashing in on their partner’s success.

FIH Mobile, a Hong Kong listed subsidiary of Foxconn’s, has been posting horror losses, with a half year net loss of US$348.06 million from US$196.9 million a year ago.

Foxconn’s American manufacturing project in Wisconsin has also been identified as an area that may be blowing out operating expenses, which have increased 18 per cent year-on-year to NT$44.95 billion (AUD$2 billion).

 

The ever growing trade war is putting a dampener on sales by digging at consumer confidence. Foxconn may consider expanding its capacity outside of China to avoid getting caught in the cross-fire.

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