March 29, 2014 4:11 am JST

Hon Hai's 2013 sales up just 1% on Apple's funk

KAZUNARI YAMASHITA, Nikkei staff writer

TAIPEI -- Group sales at Hon Hai Precision Industry edged up 1% on the year to 3.95 trillion New Taiwan dollars ($129 billion) for the year ended Dec. 31, the company said Friday.

     Sales growth at the Taiwanese electronics manufacturing services giant was the weakest since the 0.4% rise logged in 2009, a period marred by the effects of the global financial crisis.

     The latest slowdown is believed to reflect a slump at Apple, which is said to account for 40-50% of group sales. When the U.S. technology icon lost steam in the first half of 2013 on competition from lower-priced smartphones, Hon Hai paid the price with year-on-year sales declines.

     Operating profit rose 1% to NT$109.3 billion in 2013. Labor costs at core production bases in mainland China have risen, weighing on profit.

     But October-December sales surged 17% to NT$1.32 trillion, with operating profit climbing 9% to NT$44.9 billion. Sales and profit bounced back thanks to EMS orders for Apple's iPhone 5S, rolled out last fall. But this was not enough to offset the first-half slowdown.

     Established in 1974, Hon Hai entered the EMS business in the 1990s. Sales surged at a year-on-year clip of 50-70% in the following decade. Until now, the company has offset low margins with brisk sales growth. But competition from other Taiwanese players for EMS orders is heating up.