Apple supplier Foxconn reported a 56% decline in first-quarter net profit, its biggest quarterly fall in three years, falling short of forecasts.
During the January-March quarter, Foxconn disclosed a decline in net profit to T$12.8 billion from T$29.45 billion in the corresponding period last year, which was significantly below the average projection of T$29.18 billion in profit by analysts, according to Reuters.
The company attributed the significant decline to a T$17.3 billion markdown linked to its ownership stake of 34% in the Japanese electronics company Sharp Corp.
"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. However, Liu said visibility on Foxconn's outlook for the year was limited, and the company maintains a conservative outlook.
According to Chief Financial Officer David Huang, although the inventory levels were above the norm, the company was adjusting to bring them down to a relatively low level by the end of the current quarter, as he stated they were controllable.
Foxconn anticipates a year-over-year decrease in revenue for its primary consumer electronics products in the second quarter, which constitute over half of its total revenue. Additionally, the company revised its forecast for cloud and networking products in 2023, now expecting them to remain flat instead of experiencing significant growth as previously predicted.
While overall revenues are projected to decline in the second quarter, Foxconn maintains its full-year forecast of flat revenues. The Apple supplier is also continuing its efforts to expand outside of China, acquiring land in India and Vietnam for large-scale facilities.