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Hon Hai Precision Scored an Extraordinary Profits Performance in The Third Quarter

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Core Tip: Taipei, Nov. 14, 2012 (CENS)--Hon Hai Precision, Taiwan’s leading manufacturing firm, scored an extraordinary profits performa

Taipei, Nov. 14, 2012 (CENS)--Hon Hai Precision, Taiwan’s leading manufacturing firm, scored an extraordinary profits performance in the third quarter this year, with its consolidated gross margin reaching 9.54%, the highest since the fourth quarter 2009, and operating income rate hitting 3.42%, a 10-quarter high, according the consolidated financial statement released by the company yesterday (Nov. 13). The exceptional performance is reportedly caused by Apple raising its contract-production cost and procurement prices for components and parts.

Hon Hai reported yesterday that the company racked up consolidated revenue of NT$874.4 billion in the third quarter, down 1.96% sequentially. Thanks to reimbursement of loss of NT$4.5 billion for investment in Sharp listed in the second quarter, its consolidated after-tax net profits soared 140% sequentially to NT$30.256 billion in the third quarter, with earnings per share (EPS) reaching NT$2.57, higher than the amount in the first half.

The company’s consolidated gross margin of 9.54% in the third quarter was 1.62 percentage points higher than the second-quarter level and the consolidated operating income rate of 3.42% also increased by 1.01 percentage points than the second quarter.

In the first three quarters this year, the company’s consolidated revenue advanced 16.36% year-on-year to NT$2.76 trillion and after-tax net profits rose 19.04% to NT$55.336 billion, with EPS amounting to NT$4.9.

Hsin Chih-ping, Hon Hai spokesman, attributed the increase in the third quarter’s consolidated gross margin to change in the product makeup and increased efficiency, including the increased shipment share of high-priced products.

Institutional investors believed that increased gross margin of Hon Hai in the third quarter may be associated with subsidies provided by Apple to its suppliers, as a response to the labor problem plaguing the Chinese factories of Foxconn, a subsidiary of Hon Hai, earlier this year and compensation for other suppliers, which turned down orders from other clients to meet the demand of Apple.

Another major factor for the increased gross margin of Hon Hai in the third quarter is increased shipment of high-priced products, such as servers and storage equipment.

(by Philip Liu) 

 
 
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