Foxconn profits rise on work-from-home boom

Upbeat forecast reinforces strong growth momentum that saw Q1 profit rocket with revenue rising 45%

Foxconn’s Shanghai facility in Minhang District. Hon Hai Precision Industry, trading as Foxconn, is a Taiwanese electronics contract manufacturing company. Photograph: iStock

Foxconn’s Shanghai facility in Minhang District. Hon Hai Precision Industry, trading as Foxconn, is a Taiwanese electronics contract manufacturing company. Photograph: iStock

 

Taiwan’s Foxconn on Friday forecast a 15 per cent rise in second-quarter revenue as the work-from-home boom spurred by the Covid-19 pandemic extends, boosting demand for consumer devices such as the iPhones that Foxconn assembles for Apple.

The upbeat forecast by the world’s biggest contract electronics manufacturer reinforces strong growth momentum that saw its first-quarter profit rocket with revenue rising by 45 per cent, even as it is forced to sharply reduce iPhone production in India due to surging coronavirus cases there.

It also echoes Apple’s own positive outlook. In April the tech giant said it expected revenue for the June quarter to grow by “strong double digits”.

“Smartphone demand remains strong ... we will see relatively strong growth (on the year) in the second quarter,” Chairman Liu Young-way told an online investors conference.

Officially known as Hon Hai Precision Industry Co, Foxconn said January-March net profit surged to T$28.2 billion ($1 billion) from T$2.1 billion a year earlier, when business was badly hit by factory disruptions early in the outbreak of the Covid-19 pandemic.

The result was well above an average forecast of T$24.41 billion compiled from 11 analysts’ estimates by Refinitiv, and up 42 per cent up from first-quarter 2019 net profit.

Foxconn said sales from its major revenue contributor - consumer electronics including smartphones and wearable devices - climbed more than 15 per cent in the first quarter from a year earlier, while computing products such as laptops also rose more than 15 per cent.

First-quarter revenue rose 45 per cent from a year earlier to T$1.34 trillion. That was Foxconn’s highest ever first-quarter revenue, marking a 28 per cent jump from the same period in 2019.

The company had previously expected first-quarter revenue to be “better than normal” for the season thanks to strong sales of smartphones and telecommuting devices.

Foxconn said it was closely monitoring “materials shortages” in the consumer electronics supply chain, amid a crunch in semiconductor supplies that has hit the auto industry, though described the impact as “limited”. It assembles iPhones at plants in China and India, the latter now ravaged by the spread of the coronavirus.

Foxconn’s shares have risen 14 per cent this year. They ended up 1.5 per cent on Friday, compared with a 1 per cent rise for the broader market. – Reuters