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Accounting and Finance

Foxconn's Hon Hai net profit up 41 percent in Q2

Foxconn's Hon Hai Precision Industry reported a strong gain in net profit during the second quarter, but revenue growth for the Apple supplier continued to remain weak.

Hon Hai's net profit in the quarter reached NT$16.9 billion (US$564 million), up 40.8 percent from NT$12 billion in the same period a year ago, the company reported on Tuesday.

Revenue, however, increased year-over-year by only 0.4 percent, putting it at NT$895.6 billion.

Hon Hai is the main manufacturing arm for Taiwan-based Foxconn Technology Group and builds products for major tech vendors including Amazon, Microsoft and Nintendo. Apple, however, is the company's most important customer and makes up about 40 percent of Hon Hai's revenue, according to analysts.

In this year's first quarter, Hon Hai posted a 19.2 percent year-over-year decrease in revenue. Some analysts have attributed the decline to weak demand for Apple's iPhone 5 product.

Hon Hai's reported financials on Tuesday did not go into detail about the business conditions behind its results. But in June, Foxconn CEO Terry Gou apologized to company shareholders for Hon Hai's falling stock price. At the time, news reports had emerged that Hon Hai had also lost manufacturing orders for Apple's rumored budget iPhone to rival Taiwan-based Pegatron. Gou declined to name Pegatron, but said his company's competitors were using low prices on manufacturing to grab orders.

A budget Apple iPhone is rumored to go on sale later this year, alongside with the new iPhone 5S.

Despite its declining revenue, Foxconn is working to expand its manufacturing and research. Last month, Gou made a high-profile visit to the Chinese city of Guiyang, where his company plans to establish a new manufacturing facility that could build products for the nation's electronics market. Foxconn already has over 1.2 million workers in China.

The company is also investing in researching robotics to better automate its factory assembly lines. In addition, Foxconn wants to hire 3,000 software engineers in Taiwan to help the company make Mozilla's Firefox OS a viable mobile OS competitor.

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