• FY 2022 EPS at NT$10.21 is 15-year high
• 4Q 2022 revenue higher on-year, but pandemic affected margins
• Cash dividend at NT$5.30 per share, highest since 1991 listing
• Operating outlook for full year 2023 is neutral and flattish
• 1Q 2023 outlook roughly flat on-year, to see seasonally smaller on-quarter decline​​​​​​​

15 March 2023, Taipei, Taiwan – Hon Hai Technology Group (“Foxconn”) (TWSE:2317) today announced its full year and fourth quarter 2022 financial results.

Net profit for 2022 totaled NT$141.5 billion, resulting in an earnings per share of NT$10.21, a 15-year high. Due to greater uncertainty in the global economic situation for 2023, the company's outlook for the whole year is neutral and flattish. At the same time, Hon Hai also announced a cash dividend of NT$5.30 per share, setting a new high since the company’s listing in 1991, while outlining six major operational pillars for this year, as part of the Group’s medium- to long-term development path.

For the full year 2022, revenue reached an annual record of NT$6.627 trillion, up 11% from a year earlier; gross profit at NT$400.1 billion, rose 10% on-year; operating net profit at NT$173.8 billion, increased 17% on-year; and net profit at NT$141.5 billion, gained 2% on-year. Gross profit margin, operating profit margin, and net profit margin were 6.04%, 2.62%, and 2.13%, respectively, compared with 6.04%, 2.49%, and 2.32% in the previous year; despite the performance in margins, their absolute values increased. EPS for 2022 reached NT$10.21, an increase of NT$0.16 from a year ago.

In the fourth quarter, revenue reached NT$1.963 trillion, up 4% on-year; gross profit at NT$111.1 billion, fell 2% on-year. Operating net profit was down 16% in the last three months of 2022 to NT$44.2 billion, while on a net basis, profit fell 10% year-on-year to NT$40.0 billion. Gross profit margin, operating profit margin, and net profit margin were 5.66%, 2.25%, and 2.04%, respectively, compared with 6.03%, 2.79%, and 2.35% during the same three months a year ago, as pandemic-affected operations weighed on margins in the fourth quarter. EPS in the October-December quarter reached NT$2.88, down NT$0.32 from the year ago period.

Hon Hai Chairman and CEO Young Liu gave credit for performance in the fourth quarter, firstly, by offering a heartfelt appreciation to the Group’s colleagues for their hard work during the period, especially in face of extraordinary pandemic challenges. He said that through their efforts to prioritize the health and safety of employees and the safety of production, the pandemic was quickly brought under control, operations rapidly returned to normal, which led to a 4% year-on-year growth in fourth quarter revenue, beating expectations.

Chairman Liu pointed out that the Group’s revenue in 2022 reached a new record high of NT$6.6 trillion, resulting in an annual growth of over 10%. While in line with what was predicted in the previous quarterly conference call, it exceeded expectations provided at the start of last year by a large margin.

Based on the Group's policy that the cash dividend payout ratio shall not be less than 40%, Chairman Liu announced this year’s cash dividend at NT$5.30 per share, implying a payout ratio of 52%, a record since Foxconn listed in 1991. The cash dividend payout ratio has exceeded 50% for four consecutive years now.

Chairman Liu said that although he attaches great importance to the improvement of gross profit margin, he pays more attention to the maximization of EPS, because only with a higher EPS can more cash dividends be distributed to investors.

He maintained his view from the previous quarter regarding the outlook for 2023. Chairman Liu said the full year outlook for the ICT industry remains neutral, despite relatively conservative visibility due to worries for a slowdown in global economic growth, monetary policy tightening of various countries, and the tapering of pandemic-related product growth. He emphasized the Group will do its best to maintain a stable performance. The operating outlook this year is expected to be roughly flat.

Even with market uncertainties this year, Hon Hai can still grow in three segments - components and other products; computing products; and cloud and networking products, Chairman Liu said. Inflation, exchange rates, and higher personnel costs incurred during the pandemic will affect gross profit margin performance this year, leading the company to continue to prioritize maximizing EPS to create the fullest profits.

The operational outlook for first quarter 2023 is estimated to be roughly flat year-on-year. Sequentially, the anticipated on-quarter decline will be seasonally smaller than usual, reflecting a lower comparison base due to pandemic-affected operations being depressed in the fourth quarter, followed by the boost to January shipments with the return to normal production in Zhengzhou operations, Chairman Liu said.

He also outlined six operational pillars for 2023:

1. ICT
   1. Strengthen innovation and connect with new businesses: The Group’s business groups have gradually invested in EV-related fields; this year, in addition to making great progress in the field of acoustics, the Group will also seize business opportunities in AI servers.
   2. Maximize EPS, create more profit
2. EV
   1. Expansion of EV layout in North America: Comprehensively cooperate with traditional and start-up auto manufacturers. At present, the Group's new electronic control and sensor product lines will be launched within this year, and the testing, verification and manufacturing of battery cells and battery packs will also be carried out this year; the production of self-driving tractors and battery replacement modules is expected to start in the near future.
   2. Expand and deepen customer base: Continue to expand customer base, advance the sound development trend of supply chain cooperation; this year, new components and vehicle assembly will contribute to EV revenue.
   3. Continue to advance battery R&D: Battery center in Ho Fa Industrial Park in Kaohsiung is expected to conduct a test run on the first line in the fourth quarter of 2023; LFP cells for electric buses also expected to enter the mass production in second quarter of 2024.
3. Semiconductors
   1. Promote global deployment and partnership cooperation: Continue to promote cooperation with strategic partners. In terms of SiC, the product and advanced packaging and testing layout are progressing smoothly. This year, the focus is on customer development, preparation for mass production, and cooperation in upstream and downstream supply chains.
   2. Strengthening compound semiconductor efforts: The software/hardware platform for the development of automotive chips has been established and will be fully introduced into the ongoing development, design and verification of automotive MCU/SoC chips this year.
4. Software
   1. Layout of Internet of Vehicles infrastructure: Continue to develop smart cockpit, EEA architecture and various software solutions with partners, while strengthening the infrastructure of Internet of Vehicles, continuing to invest in the development of vehicle platform HHEV.OS, to realize the goal of software-defined EV.
   2. AR glasses: Strengthen the layout of AR glasses content and applications, and grasp the growth opportunities from new applications and technologies.
5. Global footprint
   1. Optimize production capacity layout: Leveraging the advantage of an extensive global footprint, cooperate with customers to move towards the goal of "capacity optimization".
   2. Continue to develop new BOL markets: Work with governments of various countries to create resilient supply chains and assist countries in creating economic growth momentum.
6. ESG
   1. Performance link and improve on labor regulations: Revise the Group’s code of conduct and formulate responsibility standards; and publish a chapter on Hon Hai's labor rights, becoming an industry benchmark.
   2. Establish a green energy investment platform: Expand domestic and overseas participation in renewable energy, energy storage and other related investments, and lead Hon Hai's supply chain in energy transformation and upgrading.