Foxconn Profits Drop Nearly 90 Percent Amid COVID-19 Pandemic

iPhone manufacturer Foxconn has reported that the coronavirus has vastly reduced its profits, reads a new report from Reuters.

Taiwan-based Foxconn said its January-March net profit was 2.08 billion New Taiwan dollars ($69.6 million USD), sharply lower from NT$19.83 billion a year ago and below analyst estimates. Revenue fell 12 percent to NT$929.13 billion, it said Friday, beating analyst estimates.

The pandemic will continue to cast a shadow of uncertainty over the company, with April-June revenue expected to fall on year by a single-digit percentage, said Young-Way Liu, Foxconn’s chairman.

“The visibility of our outlook for the whole year is limited. Right now, there is no way I can offer the outlook for the latter half of this year,” Mr. Liu said in a conference call.

Foxconn had already attempted to brace investors for bad news back in March. At the time, the company failed to give a clear indication of how its profits would look for the rest of the year, owing to the unprecedented uncertainty of the virus. “Prevention of outbreak, resumption of work and production are our top priority,” Liu said at the time.

Liu said that outlook for the second half of the year remains unclear, but he does expect growth from the computing division as the global pandemic creates demand for work and entertainment devices. The smartphone market, on the other hand, will likely take a huge hit, says Liu.

The company’s smartphone division is forecast to post a 15 percent yearly decline in sales as the virus is set to have “an enormous” impact on demand. In the first quarter, the division accounted for 42 percent of the company’s revenue.

“For consumer electronic products, because everyone is staying at home, naturally it affects consumers’ purchasing power and such power might take a very long time to recover,” he said.