Hon Hai reports highest-ever Q2 net profit on AI boom

Taipei, Aug. 12 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. reported its highest-ever net profit for the second quarter on Wednesday, with cloud and networking devices accounting for more than 50 percent of its revenue during the current AI boom.

In a statement, iPhone assembler and AI server maker Hon Hai, also known as Foxconn globally, said it posted NT$59.97 billion (US$1.86 billion) in net profit during the April-June period, up 35 percent from a year earlier and up 20 percent from a quarter earlier.

Hon Hai's earnings per share for the second quarter hit NT$4.27, compared with NT$3.19 a year earlier and NT$3.56 in the first quarter.

In the second quarter, Hon Hai generated NT$2.53 trillion in consolidated sales, up 41 percent from a year earlier and up 19 percent from a quarter earlier.

The cloud and networking division accounted for 51 percent of second-quarter total revenue, up from 48 percent in the first quarter, while the smart consumer electronics division made up 29 percent of total sales in the April-June period with the computing division and the electronic components division representing 15 percent and 5 percent, respectively.

The world's largest contract electronics maker said its gross margin -- the difference between revenue and cost of goods sold -- hit 6.12 percent in the second quarter, down 0.21 percentage points from a year earlier and down 0.06 percentage points from a quarter earlier.

Hon Hai said its operating margin -- the difference between sales and cost of goods sold and operating expenses -- stood at 3.75 percent in the second quarter, up 0.60 percentage points from a year earlier and up 0.18 percentage points from the previous quarter.

Hon Hai added that its net margin -- the difference between gross profit and total expenses, including interest payments and taxes -- reached 2.37 percent in the second quarter, down 0.10 percentage points from a year earlier but up 0.01 percentage points from the previous quarter.

Second-quarter operations improved significantly on both a year-on-year and a quarter-on-quarter basis, the company said, citing a stronger product portfolio with the addition of AI servers and AI racks, driven by AI infrastructure investments.

In the first half of this year, Hon Hai's net profit stood at NT$109.89 billion, up 27 percent from a year earlier, with EPS reaching NT$7.84, it said.

The company's consolidated sales for the January-June period rose 35 percent from a year earlier to NT$4.65 trillion, Hon Hai added.