Smartphone assembler FIH Mobile warns first-half profit could fall 92 per cent
Company’s shares tumble 21 per cent after profit warning
FIH Mobile, the top assembler of smartphones for Xiaomi, expects profit for the first half of 2016 to plunge by as much as 92 per cent as the global smartphone market continues to slow.
The company, which is part of the Foxconn group of companies controlled by Taiwan’s Hon Hai Precision Industry, also expects revenue to fall 35 per cent compared to the same period last year, missing analyst estimates.
FIH Mobile, which is listed in Hong Kong, saw its share price slide 21 per cent on Friday after the profit warning was issued.
Analysts attribute the decline in profit to a slowing smartphone market, especially for Motorola and Sony smartphones which are also assembled by FIH Mobile.
Globally, the market is slowing and this is largely due to the slowdown in the growth of mature regions
“We estimate that Lenovo saw Motorola smartphone shipments [fall] around 40 per cent year on year,” Jefferies analysts Ken Hui and Kevin Zhang said in a note. Jefferies downgraded its rating on FIH Mobile from “buy” to “hold”.
A moderate decline in Xiaomi’s smartphone shipments this year has also affected FIH Mobile’s revenue, according to Jefferies.