Foxconn International Holdings Limited (HKG:2038), the world’s largest manufacturer of handsets and wireless communications devices, reported $316.4 million losses or $4.33 per share for 2012 as a result of weak demand from its major clients. According to the company, the sales performance of its segment in Europe suffered the biggest decline.
During the previous year, Foxconn International Holdings Limited (HKG:2038) reported a profit of $73 million. According to a report from Reuters, the company’s loss this year was the largest since 2005 when the company went public. Based on the data compiled by Thomson Reuters I/B/E/S, the $316.4 million losses reported by Foxconn is slightly lower than the $317.9 million losses estimated by analysts.
Based on the financial statement of Foxconn International Holdings Limited (HKG:2038), its revenues were $5.24 billion, down by 17 percent from $6.35 billion in revenues recorded in 2011.According to the company, fierce competition among global OEM brands and new entrants made the global handset EMS market difficult and caused pricing pressures for its products.
In addition, Foxconn International Holdings also cited that higher manufacturing overhead from increasing labor costs and materials affected its gross margin.
The company said it would continue to restructure its operations overseas to the right size and consolidate its manufacturing capabilities and business operation in China into smaller and more responsive teams to cope with volatile market conditions and to provide better services to its customers.
Foxconn International Holdings managed to optimize its Research & Development (R&D) and reduce its investments in some areas of its business, but it maintained its investments in design engineering for smartphones in Taiwan and China, which is highly appreciated by its existing customers.
Barclays Research analyst, Dale Gai said in his research note, “FIH’s fundamentals remain lacklustre due to lower-than-expected sales contribution from new customers (Amazon/Apple) and increasing low-margin orders from China smartphone customers (Xiaomi/Huawei).”
According to analysts, Foxconn International Holdings started taking some orders from its parent company Foxconn Technology Co., Ltd. (TPE:2354)’s flagship unit Hon Hai Precision Industry to produce products for Apple Inc. (NASDAQ:AAPL). The regular clients of Foxconn International Holdings were Nokia Corporation (NYSE:NOK) and Huawei Technologies Ltd (SHE:002520).
Foxconn International Holdings Limited (HKG:2038) also announced its plan to change its name to FIH Mobile Ltd to prevent confusion with the name of its parent company. The proposed name change is subject to shareholder approval.