Foxconn Forecasts Possible First-Half Profit

Foxconn International Holdings Ltd. (2038), a contract maker of phones for Nokia Oyj (NOK1V) and BlackBerry, said it may post a profit in the first half and is stepping up transactions with its parent.

Results for the six months ending June 30 will be better than the $224.1 million net loss a year earlier, the Langfang, China-based company said in a Hong Kong stock exchange filing yesterday. Foxconn International also said it’s in talks to enter a “new category” of dealings with controlling shareholder Hon Hai Precision Industry Co. (2317) It didn’t provide further details.

Foxconn released the statement after its shares rose 18 percent to HK$4.41 at the close in Hong Kong yesterday, their highest level in 13 months. The gain was the biggest in more than six months. The shares, and the city’s benchmark Hang Seng Index, had slipped less than 1 percent this year through May 30.

Increased business with Taipei-based Hon Hai, the world’s largest contract maker of electronics and the indirect owner of 68.2 percent of the company’s shares, may help boost revenue at Foxconn International. It has reported net losses in five of the last six halves, according to data compiled by Bloomberg.

The forecast improvement in its first-half results is “primarily attributable to improvement in the group’s yield and operation efficiency, as well as control of the group’s cost of sales and general and administrative expenses and optimization of its research and development resources,” Foxconn said.

In addition to a possible new category of transactions with Hon Hai, Foxconn International is also in talks to revise annual limits on existing connected dealings with the parent, according to the filing. Some of the arrangements may require approval by the company’s independent shareholders, Foxconn said.

To contact the reporter on this story: Joshua Fellman in New York at jfellman@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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