Hon Hai 1H net edges up 0.5%, Apple products fuel revenue growth

Hon Hai Precision Industry Co. said Friday its first-half net profit edged up 0.5% as revenue growth driven by strong demand for Apple products was largely offset by an accounting loss on its investment in Sharp Corp.

Hon Hai Precision Industry Co., which assembles Apple Inc.'s iPad and iPhone, said its net profit for the six months ended June 30 rose to 27.53 billion New Taiwan dollars (US$918 million) from NT$27.38 billion a year earlier.

The statement from the world's largest contract electronics maker by revenue didn't give a figure for the accounting loss on its investment in Sharp, which was due to the Japanese company's recent share price decline.

Hon Hai's first-half revenue rose 25% to NT$1.89 trillion from NT$1.52 trillion, it said, due to strong sales of Apple's iPhone and iPad.

In March, Hon Hai, together with its affiliates collectively known as Foxconn, agreed to take a 9.9% stake in Sharp for about $800 million.

As Sharp's shares have more than halved since March, Hon Hai said earlier this month that it is no longer under obligation to comply with the terms of their share-sale agreement in March. Sharp has said that the two firms are still discussing their alliance, including Hon Hai's investment.

Analysts also said Hon Hai's first-half results were likely weighed by the poor performance at its unit, contract handset maker Foxconn International Holdings.

Hong-Kong listed Foxconn International said Monday its first-half consolidated net loss widened significantly to US$226.07 million from a net loss of US$17.65 million. The unit has struggled as key clients Nokia and Motorola Mobility Holdings Inc. have been losing market share to Apple and Samsung Electronics Co. in the increasingly competitive smartphone market.

Hon Hai's fortunes hinge on its biggest client, Apple, analysts said, adding that demand for the newest version of its iPhone, to be launched in the fall, is expected to be strong. This would underpin the share price for both Apple and Hon Hai, they said.

While Hon Hai hasn't disclosed what percentage of its revenue comes from Apple, analysts have estimated that Apple orders account for about 40% of Hon Hai's revenue.

Source: http://www.totaltele.com/view.aspx?ID=476000

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