Apple supplier Foxconn on Thursday posted a 56% plunge in first-quarter net profit, its biggest quarterly fall in three years.
The Taiwanese company 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.
The world’s largest contract electronics maker attributed the slump to a T$17.3 billion writedown related to its 34% stake in Sharp Corp, its Japanese electronics maker, which reported a full-year loss of $1.9 billion.
The Foxconn-owned company wrote down the value of its panel display business and a swathe of other assets on Thursday.
“Going forward we will work harder on the management of our investment businesses,” Foxconn Chairman Liu Young-way said on an earnings call, pointing to the Sharp loss.
Overshadowed by global economic uncertainty, Liu said “visibility” on the full-year outlook was limited and the company maintained a “conservative outlook”.
Gloomy Q2 expected
While inventory levels were higher than average, the company was “actively adjusting” those levels, Chief Financial Officer David Huang said, adding that they were “controllable” and would be lowered to a “relatively low point” by the end of this quarter.
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 the company maintained its full-year forecast for revenues to be flat.
EV ambitions in spotlight
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.
Meanwhile, it also wants to replicate the success it has had with Apple’s iPhone with electric vehicles (EV).
The company said it has been approaching traditional car makers with regard to the EV business.
Formally called Hon Hai Precision Industry Co, Foxconn has acquired the former General Motor plant in Lordstown, Ohio, and has also hired a former Nissan executive, Jun Seki, to lead its efforts in EV business expansion.
Last week, Lordstown Motors warned it might be forced to file for bankruptcy due to uncertainty over a $170 million investment deal with Foxconn, its major shareholder.
Liu said Foxconn’s production in Ohio will not be affected and said they were working for mass production of other EV models there.
- Reuters, with additional editing by Vishakha Saxena