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Apple products help Hon Hai reach $1.2B in Q4 profit

updated 11:31 am EDT, Mon March 25, 2013

Change credited to improved iPhone, iPad production

Hon Hai Precision Industry, closely linked to parent brand Foxconn Technology Group, has posted a record NT$37 billion ($1.2 billion US) in net income for its fourth quarter, Bloomberg reports. The figure has also surpassed a NT$35.9 billion estimate averaged using predictions from 14 different analysts. Bloomberg credits the profits to improved and greater production of the iPhone and iPad, including the introduction of new iPads and the resolution of scratched iPhone 5 casing problems, which prior to Q4 forced Hon Hai to temporarily halt work on the phone to impose quality control demanded by Apple.

Consolidated Q4 revenue reached NT$1.14 trillion, beating a NT$1.13 trillion average estimate. For the whole of 2012 Hon Hai's revenue was up 13 percent to $3.9 trillion, with net income up 16 percent to $94.8 billion. Foxconn chairman Terry Gou has been aiming at 15 percent annual revenue growth as a long-term goal.

In the same quarter as Apple reported a lower 38.6 gross margin, Hon Hai's margin went up from 8.89 percent to 9.58 percent year-over-year. This suggests that Foxconn may be charging Apple more to make devices, at least as a way of counteracting thin margins, and possibly to help pay for better labor and safety standards demanded by groups like the Fair Labor Association.

Two drags on Hon Hai's income are said to include Foxconn International Holdings, which makes phones for companies like Nokia and BlackBerry, and Innolux, a display panel maker. Still in the air is a Foxconn plan to buy a 9.9 percent stake in Sharp. The deal has yet to be completed a year after its announcement, owing to disagreements over price, management control, and corporate strategies.

by MacNN Staff



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