Taipei, Hon Hai Precision Industry Co., the world's largest contract electronics maker, saw its net profit for the fourth quarter of last year rising more than 150 percent from the third quarter, with market analysts attributing the growth largely to disposal of subsidiary Sharp Corp.'s preferred shares, but profits were down by more than 12 percent compared to last year.
In the October-December period, Hon Hai reported NT$62.62 billion (US$2.03 billion) in net profit, up 151.72 percent from a quarter earlier. But the fourth quarter net profit was down 12.62 percent from the same period a year earlier.
Hon Hai's earnings per share for the fourth quarter stood at NT$4.06, compared with NT$1.57 in the third quarter and NT$4.14 over the same period last year.
Analysts said Hon Hai, an iPhone assembler, booked the one-time gains in the fourth quarter resulting from disposal of Sharp's preferred shares to the Japanese firm's employees, and such non-core business gains helped the Taiwanese firm improve its bottom line in the three-month period.
In August 2016, Hon Hai, also known as Foxconn in the global market, acquired a 66 percent stake in Sharp, becoming the first Taiwanese firm to hold a majority stake in a prominent Japanese company.
Due to the launch of the latest iPhones in September 2018, Hon Hai posted NT$1.81 trillion in consolidated sales for the fourth quarter, up 31.55 percent from a quarter earlier, and also up 4.59 percent from a year earlier.
In the fourth quarter, Hon Hai's gross margin, which reflects the difference between revenue and cost of goods sold, rose 1.13 percentage points from a quarter earlier to 7 percent, while its operating margin -- the difference between sales, the cost of goods sold and operating expenses -- also rose 1.27 percentage points to 3.55 percent.
Hon Hai's net margin -- the difference between its gross profit and its total expenses, including interest payments and taxes -- for the fourth quarter stood at 3.46 percent, up from the third quarter's 1.81 percent.
For the entire 2018, Hon Hai's net profit fell to a low in five years at NT$129.07 billion, down 6.97 percent from a year earlier, but its EPS rose to NT$8.03 from NT$8.01 a year earlier.
The increase in EPS resulted from a capital reduction of about 20 percent in 2018, a move by Hon Hai to boost its bottom line and maintain the figure at around NT$8 a year, analysts said.
In 2018, they said, Hon Hai registered higher operating expenses at NT$195.88 billion, up 2.86 percent from a year earlier, while the manufacturing giant booked losses from its Hong Kong-listed subsidiary FIH Mobile Ltd., which reported a net loss of US$857 million in the year.
Hon Hai owns a 62.8 percent stake in FIH Mobile, which rolls out products for non-Apple Inc. brands such as Xiaomi, OPPO and Huawei Technologies.
Hon Hai's gross margin for 2018 stood at 6.44 percent, down 0.17 percentage points from 2017 but its operating margin hit 2.57 percent, up 0.18 percentage points.
Terry Gou chairman of Hon Hai, said before the Lunar New Year holiday ended on Feb. 10 that the group is determined to make more efforts in developing artificial intelligence (AI) and integrating AI with cloud technology, to help transform the company from being a pure contract manufacturer.
Source: Focus Taiwan News Channel