TAIPEI: Apple Inc supplier Foxconn reported on Thursday a 56% plunge in first-quarter net profit, lagging forecasts in its biggest quarterly fall in three years, as global economic woes hurt demand for smart consumer electronics.
The Taiwanese company, which is the world's largest contract electronics maker, said net profit for the January-March quarter fell to T$12.8 billion ($417.17 million) from T$29.45 billion in the same period the previous year.
It was much worse than an average forecast of T$29.18 billion in profit from 13 analysts, according to Refinitiv.
Foxconn Chairman Liu Young-way, speaking on an earnings call, said the slump in profit was due to an unspecified asset write-off from non operational business. He did not elaborate.
Foxconn said it expected revenue for its key consumer electronics products to decline year on year in the second quarter. That group includes smartphones and makes up more than half of Foxconn's total revenue.
It expects revenues for cloud and networking products in 2023 to be flat, compared to a previous forecast of significant growth for those sectors.
Overall, revenues for the second quarter would fall, while full-year revenues would be flat, the Taiwanese company said. Foxconn earlier this year forecast revenue to be flat for 2023.
Apple last week reported a 2.5% fall in sales for its fiscal second quarter ended April, ahead of expectations, thanks to better-than-expected iPhone sales and notable inroads in India and other newer markets.
Foxconn, which assembles around 70% of iPhones, has been diversifying production away from China, whose strict COVID restrictions disrupted its biggest iPhone plant last year. The company is also seeking to avoid a potential hit to its business from mounting trade tensions between Beijing and Washington.
"Looking ahead, we expect the 2023 performance to be lacklustre because of the likely share loss on new iPhones on the client's production diversification strategy, coupled with upfront costs on new investments," analysts at Taipei-based Daiwa Capital Markets wrote in a report in May.
Foxconn, formally called Hon Hai Precision Industry Co Ltd, has acquired the former General Motor Co plant in Lordstown, Ohio, and has also hired a former Nissan executive, Jun Seki, to lead its efforts in EV business expansion.
Foxconn shares fell 1.4% ahead of the results on Thursday, compared to a 0.8% fall in the main market. They have risen 5.1% so far this year. - Reuters
