SINGAPORE, Apr 27: hares in Foxconn International Holdings Ltd fell 13 percent on Friday to a six-month low after the world’s biggest contract maker of cellphones warned that weaker demand from some key customers would widen first half losses.
The company, which assembles handsets for the likes of Nokia and Motorola Mobility Holdings Inc, has been grappling with rising costs and falling prices in the cut-throat market.
Foxconn International, whose parent Foxconn Technology Group helps assemble Apple Inc’s iPhones and iPads, late on Thursday flagged a ‘significant increase in consolidated net loss as compared to those for the corresponding period in 2011.’
Shares in the company plunged as much as 13 percent to HK$3.90, their lowest since Oct. 10, and are down by more than a fifth this year.
The stocks were at HK$3.98 as at 0314 GMT, down 11.4 percent, versus a 0.3 percent gain in the benchmark Hong Kong index.
Yuanta Securities said in a research note that the impact of Nokia’s weakness on Foxconn International’s business seems worse than expected.
‘Heightened pricing pressure from China smartphone customers for entry-level products could be the reason behind the unfavorable pricing changes,’ it added.
Foxconn International posted a $17.65 million loss in the first half of 2011.
It swung to a net profit for the whole of 2011, however, as major clients such as Nokia and Huawei Technologies Co Ltd shifted to higher-end smartphones.
Fast-growing Apple and Samsung have heaped pressure on Foxconn’s customers.
Nokia this month warned its phone business would post losses in the first and the second quarter as tough competition hurts it at a time of product revamp.
‘Foxconn is a turnaround story rather than a growth story,’ said William Lo, analyst at Ample Capital.
‘Since it is in a labour-intensive industry, it is facing a challenge of much faster inflating labour costs than growth in orders and products prices.’ (AGENCIES)
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