Global contact manufacturer Foxconn Technology Group (Hon Hai Precision Industry) reported better than expected fourth quarter 2017 profitability attributed to overcoming production challenges related to Apple’s iPhone X.
The Taiwan based global manufacturer and major supplier to Apple reported a 4.2 percent growth in fourth quarter net profit on an annual basis, amounting to $2.5 billion, well ahead of consensus analyst forecasts. In Q3, profitability had declined 39 percent which was primarily attributed to production challenges and delays with volume production of the iPhone tenth anniversary model. Total revenues increased 23 percent in the 4th quarter after incurring flat growth in the Q3 period.
This financial performance in Q4 is a significant accomplishment given the degree of efforts undertaken to accelerate iPhone X production to meet expected December holiday demand. Supply Chain Matters speculates that Foxconn might have extracted additional payments from Apple to support round-the-clock production volumes in the final month of 2017.
For the 2017 full year, Foxconn reported total revenues of NT$4.7 trillion, and increase of 8 percent. Full year profit was reported to be NT$138.7 billion, a decline of nearly 7 percent from 2016 performance.
Foxconn also announced last week that a subsidiary, FIT Hon Teng Ltd has agreed to acquire electronics components manufacturer Belkin International for the a reported $866 million in cash. The deal reportedly will provide Foxconn access to more than 700 owned patents of Belkin and will further enhance Foxconn’s ongoing diversification strategy to capture more of the electronics product value-chain supply activities.
© Copyright 2018. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.