Foxconn expects further earnings pressure after Q1 drop - Mobile World Live

Foxconn expects further earnings pressure after Q1 drop

18 MAY 2020

Foxconn, the world’s largest contract electronics manufacturer, recorded a massive profit decline and double-digit drop in revenue in Q1, as the Covid-19 (coronavirus) outbreak caused production delays and depressed consumer demand.

Net profit slumped 89 per cent year-on-year to TWD2.08 billion ($69.3 million), attributed to a sharp decrease in the value of its equity investments and foreign exchange fluctuations. Revenue declined 12 per cent to TWD939 billion.

On an earnings call, chairman Liu Young forecast overall revenue in the current quarter to increase sequentially, but to fall by a single-digit figure year-on-year.

Due to Covid-19 restrictions coupled with rising unemployment, which significantly impacted consumer demand, he said revenue for its consumer products division is forecast to drop 15 per cent.

Liu noted a move to remote working and surge in demand for online entertainment had “given us some new growth drivers” in areas such as cloud products. Its enterprise, computing and components units are expected to post at least 10 per cent growth.

Back to normal
CFO David Wong said working hours fell more than 20 per cent, but its efforts to re-start production in early March helped limit the decline in revenue.

He said operations in China returned to normal before the end of March, slightly ahead of expectation. The company aims to restart operations in India once it receives government approval.

Its factories in China shutdown in early February as part of efforts to minimise the spread of Covid-19.

Foxconn is Apple’s main manufacturing partner in China and analysts estimate the US company accounts for more than half of its revenue.

The iPhone maker shut stores and offices outside China in mid-March, at the same time it began reopening outlets in the mainland closed in early February to help contain the pandemic.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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