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Foxconn, formally known as Hon Hai Precision Industry Co Ltd,
reported net profit of T$24.88 billion ($805.52 million) for the
third quarter on Tuesday, 12 percent short of analyst
expectations.
While this was the biggest quarterly profit the company has
posted this year and came in 18 percent above the year-earlier
results, it was below a mean estimate of T$28.26 billion
($916.85 million) from nine analysts, according to I/B/E/S data
from Refinitiv.
"Compared to the previous quarter's profit growth, the main
reason for the results was entry into the peak season, increase
in shipment scale, and rise in production efficiency and yield,"
a company official told reporters.
"In addition, costs controls were good, the ratio of operating
expenses was smaller, which led to a profit increase
performance," the official added.
Apple warned earlier this month that holiday sales would miss
Wall Street expectations due to weakness in emerging markets
including India and foreign-exchange costs.
Shares in Foxconn and other Asian suppliers and assemblers for
Apple fell on Tuesday after several component makers warned of
weaker than expected results, leading some market watchers to
call the peak for iPhones in several key markets.
Last week, Hon Hai reported that its October sales were up 21.5
percent year on year, the slowest year-on-year growth rate for
any month since April.
Analysts said Apple changing the bottom cover of the iPhone 8
and iPhone X from metal to glass hurt profits at Foxconn, which
had supplied the metal component.
Foxconn's gross margin this year is unlikely to return to the 7
percent it enjoyed in the 2015-2016 fiscal years due to
weakening iPhone shipment growth and lower prices for metal
casings, Fubon Research analyst Arthur Liao said in a research
note ahead of the company's earnings.
Foxconn is a key assembler of the iPhone XR model, according to
analysts, the cheapest of this year's new launches and a model
that is likely seeing very little traction with customers.
Japan's Nikkei daily reported earlier this month that Apple had
told Foxconn and rival Pegatron Corp to halt plans for
additional production lines dedicated to the iPhone XR.
(Reporting by Jess Macy Yu and Hong Kong slot team; Editing by
Keith Weir)
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