Apple helps Hon Hai post record quarterly profit

Hon Hai Precision Industry Co, the world's largest contract manufacturer of electronics, posted record quarterly profit increasing output of Apple Inc iPhones and iPads.

Fourth-quarter net income rose 5.6 per cent to NT$37 billion ($1.2 billion), data compiled by Bloomberg based on full-year results published yesterday show.

Hon Hai solved production problems that had hurt output of the iPhone 5 in the prior quarter, helping it raise revenue and margins, Bloomberg reports.

According to industry experts, the company might see a drop in sales and profit this quarter on waning demand for the iPhone and increasing competition from Samsung Electronics Co.

According to experts as the company increased production of the iPhone and solved production bottlenecks, Hon Hai's profit margins improved and they may have had some room to push Apple for better pricing.

They added, iPhone shipments started falling significantly in the first quarter and there may be no new product to boost sales much in the second quarter either.

Consolidated revenue for the quarter was up 6 per cent to NT$1.14 trillion.

Full-year 2012 net income rose 16 per cent to NT$94.8 billion from NT$81.6 billion, according to the Taipei-based company's exchange statement. Revenue was up 13 per cent to a record NT$3.9 trillion.

Apple, which gets its iPhones and iPads made from Foxconn reported gross margin of 38.6 per cent for the three months through December, the lowest in two years, an indication it was paying more for components and assembly.

Meanwhile, Sharp said today that a capital injection from Taiwan's Hon Hai Precision was off the table, as the deadline passed for a deal seen as crucial for the troubled Japanese electronics giant.

Last year, Sharp announced an investment agreement which was then valued at $800 million with Hon Hai, however, the deal failed to materialise as the Japanese firm's share price nosedived.

Following the development, Sharp tapped other investors including US-based chipmaker Qualcomm and South Korean rival Samsung even as speculation continued over months over the fate of the deal.

Sharp confirmed the deal which would have seen Hon Hai take a 10-per cent stake in the firm, was off today as the deadline passed. According to Sharp the pact failed as it could not win approval from the "relevant authorities''. The company offered no details.

Sharp, which was struggling to mend a tattered balance sheet, said it was "examining the possibility of other ways of funding due to the unfulfillment of this payment".