Hon Hai October sales hit monthly high for 2016

Hon Hai Precision Industry Co. (??), the world's largest contract electronics maker and an assembler of iPhones and iPads, saw its sales in October hit a monthly high for 2016, with market analysts attributing the growth to the launch of the latest iPhones by Apple Inc.

In October, Hon Hai posted NT$471.93 billion (US$14.84 billion) in consolidated sales, up 0.76 percent from a month earlier but down 6.17 percent year-on-year, after the 4.7-inch iPhone 7 and the 5.5-inch iPhone 7 Plus went on global sale in September. The October figure was also the highest historically for that month.

Analysts said that the arrival of the latest iPhone models boosted production at Hon Hai plants in Zhengzhou, Henan province and Shenzhen, Guangdong province, while production at FIH Mobile Ltd. (???), a subsidiary, in which Hon Hai owns a 70 percent stake, benefited from strong shipments of smartphones under Chinese vendors' names.

Hon Hai currently operates a broad production base in China, employing 1 million workers to produce electronic devices for international brands.

However, month-on-month sales growth still fell short of market expectations because Hon Hai's shipments were interrupted by reduced business days due to the prolonged Oct. 1 National Day holiday in China.

In the first 10 months of this year, Hon Hai posted NT$3.43 trillion in consolidated sales, down 3.63 percent from the previous year.

In October alone, Hon Hai said, shipments of computing devices and consumer electronic devices remained solid, while shipments of communications devices was little changed from September.

Analysts expect Hon Hai to report an increase in November and December due to deferred shipments from October, adding that the fourth quarter is a traditional peak season for the company and sales for the current quarter could hit the highest level for the year.

Hon Hai is believed to be the exclusive assembler of Apple's iPhone 7 Plus but share the orders with Pegatron Corp. (??), another major Taiwanese electronics contract maker, to roll out the smaller iPhone 7.

For its part, Pegatron posted NT$5.38 billion in net profit for the third quarter, up 34.9 percent from the previous quarter, but down 10.5 percent from a year earlier, with earnings per share (EPS) at NT$2.09, compared with NT$1.55 in the second quarter and NT$2.31 for the same period last year.

However, Pegatron's EPS was lower than an earlier market estimate of NT$2.2 because the company made about NT$1.1 billion in foreign exchange losses due to the appreciation of the Taiwan dollar against the U.S. dollar in the third quarter.

Pegatron's gross margin for the third quarter fell 2.3 percentage points from the previous quarter to 4.8 percent, the lowest for 12 quarters and the company also saw its operating margin drop 1.4 percentage points to 2.5 percent, the lowest in 10 quarters.

In the first nine months of this year, Pegatron posted NT$13.47 billion in net profit with an EPS of 5.22.

Source: Focus Taiwan News Channel