Hon Hai posts record Q1 net profit on strong AI server demand

Taipei, May 14 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. on Wednesday reported its highest ever net profit for the first quarter on the back of solid global demand for artificial intelligence servers.

In a statement, iPhone assembler and AI server maker Hon Hai, also known as Foxconn globally, said it raked in NT$42.11 billion (US$1.39 billion) in net profit, a 91 percent increase from a year earlier, but 9 percent down from a quarter earlier.

Earnings per share for the first quarter stood at NT$3.03, compared with NT$1.59 over the same period of last year and NT$3.34 a quarter earlier, Hon Hai said.

Hon Hai noted that revenue generated by AI servers and general servers surged more than 50 percent from a year earlier in the first quarter on growing demand from cloud service providers (CSP) in North America.

During the January to March period, Hon Hai posted NT$1.64 trillion in consolidated sales, up 24 percent from a year earlier but down 23 percent from a quarter earlier. The first quarter results were in line with the company's earlier estimate with the quarter-on-quarter decline simply reflecting slow season effects.

Hon Hai said its gross margin -- the difference between revenue and cost of goods sold -- stood at 6.11 percent in the first quarter, down 0.21 percentage points from a year earlier and down 0.04 percentage points from a quarter earlier.

In the first quarter, the company's operating margin -- the difference between sales and cost of goods sold and operating expenses -- hit 2.83 percent, up 0.05 percentage points from a year earlier but down 0.2 percentage points from a quarter earlier, Hon Hai said.

Hon Hai's net margin -- the difference between gross profit and total expenses including interest payments and taxes -- was 2.56 percent in the first quarter, up 0.9 percentage points from a year earlier and up 0.39 percentage points from a quarter earlier.

In the first quarter, smart consumer electronic gadgets accounted for 40 percent of the company's total sales, down from 51 percent in the fourth quarter, while cloud and networking devices made up 34 percent of revenue, compared with 26 percent a quarter earlier, Hon Hai said.

Computing products represented about 19 percent of total sales in the first quarter, compared with 17 percent a quarter earlier, while electronic components accounted for 7 percent, compared with 6 percent in the fourth quarter, Hon Hai added.