Hon Hai gross, operating, net profit margins down in Q2

2019/08/14 17:49:30 fontsize-small fontsize-default fontsize-big
Hon Hai gross, operating, net profit margins down in Q2

Taipei, Aug. 14 (CNA) Hon Hai Precision Industry Co., the world's largest contract electronics maker, saw its gross, operating and net profit margins for the second quarter fall from a year earlier, according to the quarterly financial statement issued by the company Tuesday.

Market analysts attributed the decline largely to exorbitant operating costs caused by the firm's strategy to expand production capacity in India and Vietnam to reduce the impact of trade friction between the United States and China.

In the April-June period, Hon Hai, also known as Foxconn on the global market, reported record high consolidated revenue of NT$1.16 trillion (US$37.58 billion), up 10 percent from the first quarter and up 7.44 percent from the same period a year earlier.

However, the company's Q2 gross margin-- the difference between revenue and cost of goods sold -- stood at 5.31 percent, down 0.22 percentage points from Q1 and 0.32 percentage points from a year earlier. The Q2 gross margin was the lowest for any second quarter since 2013.

Meanwhile, Hon Hai's Q2 operating profit reached NT$15.55 billion, while its operating profit margin -- the difference between sales, the cost of goods sold and operating expenses -- stood at 1.34 percent, down 0.19 percentage points from Q1 and 0.13 percentage points from a year earlier.

Hon Hai reported NT$17.05 billion in net profit for Q2, down 13.98 percent from a quarter earlier, and 2.5 percent from a year earlier.

Hon Hai's net margin -- the difference between its gross profit and its total expenses, including interest payments and taxes -- for the second quarter stood at 1.47 percent, down 0.41 percentage points from 1.88 percent in the first quarter and 0.15 percentage points from 1.62 percent a year earlier.

Earnings per share (EPS) for the second quarter stood at NT$1.23, compared with NT$1.43 in the first quarter and NT$1.01 over the same period last year.

During the January-June period, Hon Hai also saw its gross margin, operating margin and net profit decline from a year earlier, although the company reported a 5.03 percent year-on-year increase in consolidated revenue, up from NT$2.11 trillion a year earlier to NT$2.21 trillion.

Over the first six months of 2019, Hon Hai's gross margin fell from 5.9 percent seen a year earlier to 5.42 percent, while its operating margin dropped from 1.92 percent to 1.43 percent.

Hon Hai's net profit also fell by 11.29 percent during the same period from NT$41.57 billion to NT$36.88 billion.

However, due to a 20 percent capital reduction, the company's EPS for the first half of this year stood at NT$2.66, up from NT$2.4 over the same period last year.

(By Chung Jung-feng and Evelyn Kao)
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