Foxconn announced first-quarter results Friday.Tyrone Siu/Reuters
Foxconn’s first-quarter profit plunged to its lowest in two decades, all but wiped out, after the coronavirus pandemic forced the Taiwanese firm to suspend manufacturing operations in China and knocked demand from customers including Apple Inc.
But the world’s largest contract electronics manufacturer, formally called Hon Hai Precision Industry, said the worst of the virus outbreak for the company was over.
New growth was to be found in the work-from-home lifestyles being adopted around the world even if the outlook for smartphone and other consumer electronics demand remained bleak, it said.
“Hon Hai will stabilize in the second quarter,” Foxconn said in a statement, adding that all of its main factories in China have now resumed normal operations.
Net profit for January-March slumped 90 per cent to T$2.1-billion ($70.3-million) from a year earlier – the lowest level since the first quarter of 2000 and well short of a Refinitiv consensus estimate of T$8.88-billion. Revenue declined 12 per cent.
For the second-quarter, the company expects revenue will show double-digit percentage growth from January-March although it will still likely mark a single-digit decline from the same period a year earlier.
“Telecommuting, online entertainment and new lifestyles have brought us new growth momentum,” Foxconn Chairman Liu Young-way told an investor teleconference.
He added that its enterprise and computing units are expected to see a yearly revenue growth of more than 10 per cent and more than 15 per cent respectively in the current quarter.
The exception is its consumer electronics division, much of which is smartphones. The division is forecast to post a 15 per cent yearly decline in sales as the virus is set to have “an enormous” impact on demand. In the first quarter, the division accounted for 42 per cent of revenue.
“For consumer electronic products, because everyone is staying at home, naturally it affects consumers’ purchasing power and such power might take a very long time to recover,” he said.
Highlighting that weak demand, first-quarter smartphone shipments in China tumbled 20 per cent, its largest decline ever, data from market researcher IDC showed this month.
Taiwan-based research firm TrendForce said last month it expects global smartphone production to slump a record 16.5 per cent to 287 million phones in the June quarter from a year earlier as the coronavirus muzzles demand.
Liu declined to given an earnings outlook for the second half or the full year, saying the pandemic had made forecasting too uncertain.
Foxconn shares closed 1.4 per cent lower ahead of the results on Friday, versus a 0.3 per cent gain for the broader market. They have lost 15 per cent for the year to date.
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