Back to list

Hon Hai unit estimates sharp fall in loss in first half-year

2019/07/19 19:34

Taipei, July 19 (CNA) FIH Mobile Ltd., a Hong Kong-listed subsidiary of Taiwan-based manufacturing giant Hon Hai Precision Industry Co., said Friday that it is expected to report a substantial fall in net loss for the first half of this year compared with a year earlier.

In a statement posted on the Hong Kong Stock Exchange, FIH Mobile said its net loss on a consolidated basis for the first six months of this year could fall to around US$85 million or even below that level, from US$348 million in net loss over the same period of last year.

Since Hon Hai, known as Foxconn in the global market, owns about 62.8 percent of FIH Mobile, the subsidiary's profitability plays a major factor in the parent company's earnings.

Shares of Hon Hai, the world's largest contract electronics maker, rose 0.38 percent Friday to close at NT$79.30 (US$2.56), off a high of NT$80.40 on the Taiwan Stock Exchange, while FIH Mobile ended up 1.19 percent at HK$0.850 (US$0.11) in Hong Kong.

FIH Mobile said its consolidated sales for the same period could top US$6.3 billion in the six-month period, down about 4 percent from US$6.56 billion a year earlier.

FIH Mobile, which manufactures products for non-Apple Inc. brands such as Xiaomi, OPPO and Huawei Technologies and runs a broad production base in China, added that the cut in its net loss largely resulted from its efforts to maintain stringent control over its operating costs.

The efforts to keep FIH Mobile operating costs lower were seen as a factor to a decline in its loss for the first quarter, when the unaudited loss stood at US$68.77 million, down from US$126 million over the same period of last year.

In the first quarter, FIH Mobile posted US$3.13 billion in consolidated sales, down 4.4 percent from a year earlier.

Friday's statement was a follow-up announcement after a profit warning was issued in May, saying that it could continue to report a net loss for the first six months, a figure that is likely to fall from a year earlier. FIH Mobile said the company was faced with downward pressure on its gross margin -- the difference between revenue and cost of goods sold -- which emerged from the end of 2017 and continued into 2018, but such risks are expected to be reduced in 2019.

The subsidiary has scheduled a board meeting for Aug. 9 and is expected to report its first-half results then.

In November 2016, FIH Mobile acquired feature phone assets from Microsoft Mobile Oy. In December 2016, FIH Mobile signed an agreement with Nokia Technologies Ltd. and HMD Global Oy on cellphone and tablet computer development under the Nokia brand.

In 2018, a unit of FIH Mobile spent about US$62 million to acquire preferred shares in HMD to upgrade its cellphone development capability.

(By Chung Jung-feng and Frances Huang)Enditem/J