Apple Supplier Hon Hai Rises as Profit Jumps on Cost Cuts

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Hon Hai Precision Industry Co. rose after posting gross profit that beat estimates in a sign that the Apple Inc. supplier cut costs to offset slowing demand.

Its shares closed 1.5 percent higher at NT$88.70 in Taipei, while the benchmark Taiex fell 0.1 percent. Hon Hai on Thursday reported second-quarter gross margin of 7.2 percent, beating the 7 percent average of analysts’ estimates while net income was in line with expectations.

Hon Hai, which gets half its revenue from Apple, is facing a slowing Chinese economy and weakening global demand for new smartphones. Its ability to trim costs and widen margins could help it offset any impact from an Apple revenue forecast that missed estimates.

Taiwan’s second most-valuable company, part of the Foxconn Technology Group, doesn’t provide revenue breakdowns, forecasts or hold investor conferences. Its FIH Mobile Ltd. unit, which makes smartphones for Xiaomi Corp., Huawei Technologies Co. and OnePlus, is more than 65 percent owned by Hon Hai, with its revenue included in consolidated earnings.

Hon Hai Thursday reported second-quarter net income climbed 27 percent to NT$25.7 billion ($798 million) compared with the NT$25.2 billion average of 12 analysts’ estimates.

Apple sold 47.5 million iPhones in the June quarter, missing the 48.8 million average of estimates. The company also forecast revenue this period that fell short of expectations.

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