Foxconn arm flags profits warning as customer demand falls
Foxconn International Holdings (FIH), part of Taiwan's Hon Hai Precision Industries, has flagged a profit warning for the full year of 2012, continuing its losses from the first half.
FIH is a subsidiary of Hon Hai, the world's largest contract electronics manufacturer, which trades as Foxconn, and is the major contractor for Apple's iPhone and iPad. FIH, in contrast, remained heavily dependent on Nokia and Motorola, which have failed to catch up with the smartphone frenzy.
The loss in 2012, which contrasts with a US$72.8 million net profit in 2011, is primarily attributable to lower demand from some of the company's biggest customers, said the company's chairman, Vincent Tong Wen-hsin, according to a filing with the Hong Kong stock exchange yesterday.
In the first six months of last year, FIH posted a net loss of US$226 million, up from US$17.6 million in the first half of 2011.
The losses in the second half in 2012 will be lower than the first half, thanks to asset disposals, cost-cutting and "resource optimisation measures", Tong said.
FIH sold a subsidiary for US$15.3 million in October and expected to pocket US$5.7 million in profit.
The senior management of FIH has changed as the company struggles to turn around.
Chief executive Cheng Tien-chong said in July he would retire from the post even though there were two years to run on his contract.
When Cheng handed in his resignation he was less than a year into the job, after being appointed as chief executive in November 2011. He was succeeded by Chih Yu-yang.
Tong was appointed chairman to replace Samuel Chin Wai-leung last December.