Impact of virus contagion on Q1 earnings ‘controllable’: Hon Hai

Taipei: Taiwan based manufacturing giant Hon Hai Precision Industry Co. said Tuesday that the impact of the novel coronavirus (COVID 19) on its bottom line in the first quarter of this year is "controllable."

At an investor conference, Hon Hai Chairman Liu Young way (???) said the company expects sales of smart devices, items for enterprise customers and computing devices in the January March period to fall 15 percent from the previous quarter and a year earlier.

Sales posted for electronics parts and other components in the first quarter are expected to fall more than 15 percent from the previous quarter and drop over 10 percent from a year earlier, Liu said.

The head of Hon Hai, the world's largest contract electronics maker, Liu said the expected fall in sales for the first quarter would not be intolerable as the quarter is a traditional slow season, even after the company takes into account the impact of COVID 19 contagion.

Liu said Hon Hai, also known as Foxconn on the global market, expects the impact on its bottom line to be controllable.

Hon Hai is one of the largest Taiwanese investors in China with a workforce of more than 1 million at its sprawling production sites in the country. Among its major factories, the site in Zhengzhou, Henan Province, produces iPhones.

Since the outbreak of COVID 19 in Wuhan, Hubei Province at the end of December, Chinese authorities have come up with measures to lock down about 50 cities to limit population movement and the spread of COVID 19, a move that has impacted production at many factories.

Such large lockdowns in China have raised concerns over iPhone production due to a lack of labor.

In response to such worries, Liu said the company has followed the law in terms of production resumption in a bid to protect its Chinese employees.

Since the reopening of its factories in China after the Lunar New Year holiday, Liu said production has met more than 50 percent of seasonal demand for the first quarter.

By the end of March, production is expected to meet seasonal demand for the quarter, Liu said.

Due to lower production in the first quarter, he added Hon Hai expects to receive deferred orders in the second quarter so revenue for the first two quarters of the year will be little changed from a year earlier.

However, Hon Hai has lowered its forecast for 2020 sales growth from 3 5 percent made in January to 1 3 percent, Liu said.

Before the investor conference, market analysts had forecast Hon Hai's revenue for the first quarter would fall 42 percent from a quarter earlier

Source: Focus Taiwan News Channel