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May 27, 2017

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Hon Hai China-based unit profitable last year after streamlining efforts

TAIPEI -- FIH Mobile Ltd. (富智康), a China-based subsidiary of the world's largest contract electronics maker Hon Hai Precision Industry Co. (鴻海精密), turned a profit in 2013 on the back of its continued efforts to optimize its organization structure.

Last year, FIH posted US$77.71 million in net profit, an improvement from US$316 million in net loss recorded in the previous year.

Market analysts said Hon Hai is expected to benefit from an improvement in FIH's bottom line as the parent company owns a roughly 70 percent stake in the subsidiary.

After the release of FIH's earnings results, shares of Hon Hai, which assembles iPhones and iPads for Apple Inc., rose 0.36 percent to close at NT$84.70 (US$2.77), with 23.98 million shares changing hands on the Taiwan Stock Exchange. The benchmark weighted index on the main board ended down 0.23 percent at 8,577.17 points.

Hon Hai has not released its 2013 results. In 2012, the Taiwanese electronics giant posted NT$8.03 in earnings per share (EPS), up NT$6.94 in EPS recorded a year earlier.

FIH admitted that 2013 was a challenging year for the company as some of its clients experienced lower demand amid fierce competition.

But, "after continuing to optimize our organization structure, conduct site consolidation and divest less-utilized assets, we successfully converted into a more nimble and flexible organization and are capable of handling high-mix orders in smaller volumes," the Hon Hai subsidiary said in a statement.

In 2013, with production capacity utilization on the rise, FIH registered a gross margin of 4.48 percent, compared with minus 0.01 percent seen a year earlier, while its sales totaled US$4.997 billion, down 4.6 percent year-on-year.

Despite the improved bottom line in 2013, FIH did not propose to issue any dividend.

Looking forward, FIH said it will continue its efforts to raise production automation in a bid to strengthen its efficiency, while it will try to build up business ties with new clients and set up strategic alliances with new partners to further boost its bottom line in 2014.

In November, FIH signed a five-year deal with Canadian handset maker BlackBerry Ltd. to develop and make new smartphone models.

Under the agreement with BlackBerry, the two partners aim to tap the rapidly growing smartphone market in Indonesia and will also make new devices for other emerging markets, including Mexico.

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