Hon Hai's Hong Kong-listed unit swings to first-half profit
CNATAIPEI -- Hong Kong listed FIH Mobile Ltd., a subsidiary of Taiwan-based contract electronics maker Hon Hai Precision Industry Co., on Tuesday reported a profit in the first half of this year, attributing it largely to its efforts to lower costs and improve production efficiency.
August 14, 2013, 11:53 am TWN
The profitability of FIH Mobile, along with hopes that U.S.-based Apple Inc. will unveil new products in September, boosted shares of Hon Hai, which assembles iPhone and iPad for the U.S. company.
Shares of Hon Hai rose 2.06 percent to close at NT$79.10 (US$2.64) on the Taiwan Stock Exchange Tuesday, with 42.61 million shares changing hands, while the weighted index on the main board ended up 1.04 percent at 7,986.27 points.
Market analysts said that as Hon Hai owns about a 70 percent stake in FIH Mobile, the unit's improved bottom line is expected to increase the parent company's profitability.
In the first quarter of this year, Hon Hai posted NT$1.38 in earnings per share, up from NT$1.35 a year earlier. The company has not yet reported its second quarter results.
FIH Mobile, formerly known as Foxconn International Holdings Ltd., in a statement reported US$17.66 million in net profit for the first half of this year, compared with US$316.42 million in net loss for the entire 2012.
The first-half results also showed an improvement from the same period of last year, when FIH Mobile incurred US$226 million in net loss.
In the first six months of this year, FIH Mobile's gross margin stood at 4.05 percent, compared with minus 1.48 percent in the first half of last year. FIH Mobile currently operates a broad production base in China.
“The Asia segment performed well as a result of such cost down initiatives and site consolidation efforts,” FIH Mobile said in a statement filed with the Hong Kong stock exchange.
“With products from mainland China of lower manufacturing costs as a result of cost rationalization and the earnings contributed by repair services business in Mexico and the United States, the America segment's performance became better,” FIH Mobile said.
However, FIH Mobile said sales in Europe remained sluggish as the economy in the eurozone has not yet recovered.
The Hon Hai unit said it will continue to consolidate production in China in a bid to further boost efficiency and will pour more funds in smartphone design in China and Taiwan.
FIH Mobile launched a primary listing on the Hong Kong market on Feb. 3, 2005.