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Hon Hai July sales fall to 17-month low
Central News Agency
2014-08-09 12:05 PM
Taipei, Aug. 9 (CNA) Hon Hai Precision Industry Co., the world's largest contract electronics maker, saw its sales for July fall to a new 17-month low with market analysts attributing the decline to the impact from a product transition period. Hon Hai, which assembles iPads and iPhones for Apple Inc., posted NT$260.22 billion (US$8.67 billion) in consolidated sales, down 17.91 percent from June and also down 13.33 percent from a year earlier. Analysts said before Apple launches the next generation of the iPhone and iPad, Hon Hai no doubt felt the pinch from an unfavorable product transition period in July, when the U.S.-based consumer electronics giant slowed down its pace of orders. As a result, the Taiwanese firm reported a double-digit month-on-month decline in consolidated sales last month, they said. In addition, analysts said, the drop in sales reflected a high comparison base seen in June, when Hon Hai's consolidated sales totaled NT$316.99 billion, up 18.3 percent from May. The June figure has been the highest monthly level so far this year. Among Hon Hai's three major product categories, consumer electronics suffered a relatively steep decline in sales, while consumer purchases of computing and communications devices appeared relatively stable. Despite the steep drop in the parent company's consolidated sales in July, Hon Hai's subsidiary FIH Mobile Ltd., which runs a broad production base in China, enjoyed stable shipments as the unit's clients, such as Chinese smartphone vendors Xiaomi Corp. and Huawei Technologies Co., and U.S.-based Amazon, kept placing orders for production of their new smartphone models. In the first seven months of this year, Hon Hai's consolidated sales rose 0.82 percent from a year earlier to NT$2.23 trillion. Analysts said that Hon Hai will see its sales growth momentum pick up starting from August to push up revenue for the third quarter as Apple's orders stream in at a larger pace ahead of the launch of the new iPhone and iPad, likely in September. They added that sales are expected to grow even more significantly in the fourth quarter. Deutsche Securities said Hon Hai's third quarter consolidated sales are expected to grow 13 percent from the second quarter, and the fourth quarter revenue could rise 39 percent from a quarter earlier. The brokerage said it remains upbeat about Hon Hai's outlook and has issued a target price of NT$113.00 on Hon Hai shares. On Friday, shares of Hon Hai fell 0.97 percent to close at NT$102.50 on the Taiwan Stock Exchange. Bank of America Merrill Lynch said Hon Hai's relatively low valuation has made the stock attractive to investors, and the brokerage has listed Hon Hai as a top pick among the local suppliers to Apple. (By Jalen Chung and Frances Huang)
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