- Company cites transition by customers for weaker result
- Key smartphone assembly customers include Xiaomi and Sony
FIH Mobile Ltd. fell the most in more than seven years after the assembler of smartphones for Xiaomi Corp. and Sony Corp. said first-half profit will plunge as much as 92 percent.
Shares plummeted 21 percent, the biggest decline since October 2008. Net income will be $10 million to $20 million in the six months ending June, the company said Thursday after the market closed, citing lower sales and “customer transition.” That compares with profit of $129.8 million a year earlier and analyst estimates for $109.3 million.
FIH Mobile, controlled by Foxconn Technology Group, is the latest member of the global smartphone industry to flag a weakening in the sector amid an unprecedented decline in shipments and a slowdown in China. Apple Inc. is expecting its second quarter of falling iPhone sales, Sony is seeing lower sales for the sensors used in cameras and chipmaker SK Hynix Inc. has warned of weaker demand.
“FIH has suffered from a slowdown in smartphone shipments at its key customers since the second half of 2015 including Xiaomi and Sony,” analysts at China International Capital Corp. led by Andrew Lin said in a report. CICC cut the stock to hold from buy, as did analysts at Daiwa Securities Group Inc. and Jefferies Group LLC.
FIH said sales in the half will fall to below $2.47 billion compared to $3.83 billion a year earlier. Analysts were expecting revenue to reach $3.7 billion.
Strategy Analytics on April 28 reported that smartphone shipments fell for the first time in history during the first quarter of 2016.
Demand for Xiaomi’s smartphones remains “very strong,” said Kaylene Hong, a spokeswoman for the Chinese mobile maker.
“We are continuing to work with all our manufacturing partners to increase production in the upcoming quarters to meet the demand,” she said in an e-mail.