• Record high 2Q and 1H net profits on core operations
• Raises full-year performance to “growing” from “roughly flat”
• Sees better product portfolio, customer structure
• 3Q outlook cautious, but growth expected
• US footprint widens with more Ohio manufacturing, R&D center planned for Michigan

10 August 2022, Taipei, Taiwan – Hon Hai Technology Group (“Foxconn”)(TWSE:2317) today announced its second quarter and first half 2022 financial results.

In the April-June quarter, revenue reached NT$1.51 trillion, a record high for any second quarter, and up 12% year-on-year. Gross profit margin was 6.40%, an increase of 0.37% compared to the same period a year ago. Net profit attributable to the parent company was NT$33.29 billion, also a record high for any second quarter. Operating profit margin and net profit margin attributable to the parent company were 2.94% and 2.21%, respectively, significantly higher when compared with a respective 2.40% and 2.20% last year.

In the first six months of 2022, revenue reached NT$2.9 trillion, a record high, and up 8% year-on-year. Gross profit margin was 6.22%, an increase compared to the 5.92% of the same period a year ago. Net profit attributable to the parent company came in at a record high of NT$62.74 billion. For the January-June period, operating profit margin at 2.78% and net profit margin attributable to the parent company at 2.15% were both improved when compared with a respective 2.23% and 2.147% in the previous year.

Hon Hai revised up its full-year outlook for performance to “growing” from “roughly flat”.

“Against a backdrop of slowing demand and supply chain disruptions, the strong operating performance demonstrates the high degree of the Group’s resilience,” said Hon Hai Chairman Young Liu. “It reflects a better product portfolio and customer structure.”

Looking ahead, Liu said geopolitics, inflationary pressure and the Covid pandemic will keep the outlook cautious, but the Group’s performance is expected to grow for the third quarter compared to a year ago. On a quarter-on-quarter basis, performance is likely to be steady because of a higher base, he said.

In addition to expanding new businesses, improving profitability is also the long-term goal of the Group. In the first half of this year, Hon Hai’s gross profit margin and operating profit margin increased by 0.30% and 0.55%, respectively, from a year ago, reflecting the optimization of core operations.

However, due to poor capital markets in the first half of the year, investment income and non-core income decreased significantly. Based on current capital market conditions, Hon Hai maintains a conservative outlook for non-core income in the second half.

Of Hon Hai’s four major product groups, Liu said the cloud service provider group for the third quarter should record double-digit quarterly gains and result in year-on-year rise, the best performing of the groups due to customer growth. Consumer electronics products, however, due to a high base of comparison against the second quarter is likely to decline quarter-on-quarter in the July-September period. But replacement demand will mean it is expected to be steady from the year ago period. 

For PCs, despite the recent noise surrounding demand in this sector, Hon Hai's customers and product mix are pacing ahead of the industry. The Group's robust supply chain management gives customers stability in their component needs, an advantage that underpins Hon Hai’s third quarter outlook. Moreover, despite the pandemic lockdown in China, Hon Hai was able to optimize components and other products for use internally among its operations, allowing this segment to be fully used toward smart consumer products, and recognizing revenue. As the lockdown eases, revenue prospects will be unlocked leading to growth in the second half of the year and for the full year.

The Group’s “3+3” strategy is progressing highlighted by Hon Hai’s Ohio EV manufacturing facilities serving more customers, Liu said. Nearly 400 local employees have joined and small-scale production began in July of EV pickups. Manufacturing for Monarch Tractor is expected to begin there in January 2023, a key development for Hon Hai to extend EV technologies into other application fields, said Liu.

As part of building its ecosystem, Hon Hai will set up a passenger car R&D center in Detroit, Michigan, in which a number of experienced R&D personnel have already joined, Liu said. With the MIH alliance as solid foundation, the center will nimbly work to develop passenger vehicles and expand B2B opportunities.

In the field of automotive batteries, Hon Hai's self-developed LFP cells for electric buses are nearing the completion stage; sample deliveries should begin in the third quarter with mass production scheduled in 2024. For automotive semiconductors, Hon Hai teamed up with global leader NXP to cooperate and jointly develop next-generation automotive subsystems and solutions. In addition, Hon Hai’s participation in the private placement of TAISEC Material Corp strengthens the SiC upstream supply chain and Hon Hai's long-term competitive advantage in automotive semiconductors.