Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, yesterday forecast revenue this quarter would grow significantly, driven by seasonal demand for smartphones.
The major iPhone assembler told investors that growth momentum this quarter would extend from last quarter, when revenue increased 18 percent to NT$1.54 trillion (US$47.63 billion) from the previous quarter.
Revenue this quarter would fall on an annual basis as demand for information and communications technology products weakens across the board under an unfavorable macroeconomic environment, it said.
Photo: Ritchie B. Tongo, EPA-EFE
“Although we still expect a decline in revenue year-on-year this quarter, we believe our performance in the fourth quarter would beat our earlier expectations,” Hon Hai chairman Young Liu (劉揚偉) said.
Hon Hai said that revenue this year would fall from last year’s level, as expected, but gross margin would be higher than last year’s 6.04 percent.
Gross margin in the first three quarters rose to 6.37 percent from 6.2 percent during the same period last year, due to a better product mix, it said.
Hon Hai said its operations in China remain normal despite an investigation by local authorities into tax and land use issues.
However, the company said it is cautious about the industry’s outlook next year amid geopolitical conflicts, central banks’ monetary policies and high inflation, adding that growth in the global economy might slow next year.
“We have a relatively conservative and neutral view about next year,” Liu said. “We expect the [electronics] market to grow 5 percent next year, but that 5 percent growth could easily be offset by geopolitical factors.”
Artificial intelligence-enabled servers are the bright spot next year, and that segment would experience robust growth due to strong demand from cloud service providers, Liu said.
Demand for general servers is also showing signs of a revival, as inventory adjustments wind down, he said.
Regarding the company’s electric vehicle (EV) business, Liu said that Hon Hai started generating revenue from Model T buses and Model C sedans, and is in talks with 14 potential customers to assemble their vehicles.
Recent auto workers’ strikes in the US would drive up manufacturing costs and put pressure on automakers to outsource production, he said.
At the same time, EV makers have cut prices to attract consumers, he added.
Hon Hai’s net profit last quarter surged 31 percent to NT$43.13 billion from NT$33 billion in the second quarter, due to elevated margin performance. That meant annual growth of 11 percent from NT$38.76 billion.
Earnings per share climbed to NT$3.11, compared with NT$2.38 in the second quarter and NT$2.8 in the third quarter last year.
Gross margin rose to 6.6 percent, the highest level in about six years, from 6.41 percent in the prior quarter and 6.16 percent a year ago, attributable to improved product portfolios and favorable foreign exchange rates.
In the first three quarters of this year, net profit totaled NT$88.95 billion, down 12.4 percent year-on-year, or earnings per share of NT$6.42, compared with NT$7.32 a year earlier.
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