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Hon Hai Technology Group (Foxconn) announced its full-year and fourth-quarter 2022 financial results.
Net profit for 2022 totaled NT$141.5 billion, resulting in an earnings per share of NT$10.21, a 15-year high. Due to greater uncertainty in the global economic situation for 2023, the company's outlook for the whole year is neutral and flattish. At the same time, Hon Hai also announced a cash dividend of NT$5.30 per share, setting a new high since the company’s listing in 1991, while outlining six major operational pillars for this year, as part of the Group’s medium- to long-term development path.
For the full year 2022, revenue reached an annual record of NT$6.627 trillion, up 11% from a year earlier; gross profit at NT$400.1 billion, rose 10% on-year; operating net profit at NT$173.8 billion, increased 17% on-year; and net profit at NT$141.5 billion, gained 2% on-year. Gross profit margin, operating profit margin, and net profit margin were 6.04%, 2.62%, and 2.13%, respectively, compared with 6.04%, 2.49%, and 2.32% in the previous year; despite the performance in margins, their absolute values increased. EPS for 2022 reached NT$10.21, an increase of NT$0.16 from a year ago.
In the fourth quarter, revenue reached NT$1.963 trillion, up 4% on-year; gross profit at NT$111.1 billion, fell 2% on-year. Operating net profit was down 16% in the last three months of 2022 to NT$44.2 billion, while on a net basis, profit fell 10% year-on-year to NT$40.0 billion. Gross profit margin, operating profit margin, and net profit margin were 5.66%, 2.25%, and 2.04%, respectively, compared with 6.03%, 2.79%, and 2.35% during the same three months a year ago, as pandemic-affected operations weighed on margins in the fourth quarter. EPS in the October-December quarter reached NT$2.88, down NT$0.32 from the year ago period.
Hon Hai Chairman and CEO Young Liu gave credit for performance in the fourth quarter, firstly, by offering a heartfelt appreciation to the Group’s colleagues for their hard work during the period, especially in face of extraordinary pandemic challenges. He said that through their efforts to prioritize the health and safety of employees and the safety of production, the pandemic was quickly brought under control, operations rapidly returned to normal, which led to a 4% year-on-year growth in fourth quarter revenue, beating expectations.
Chairman Liu pointed out that the Group’s revenue in 2022 reached a new record high of NT$6.6 trillion, resulting in an annual growth of over 10%. While in line with what was predicted in the previous quarterly conference call, it exceeded expectations provided at the start of last year by a large margin.
Based on the Group's policy that the cash dividend payout ratio shall not be less than 40%, Chairman Liu announced this year’s cash dividend at NT$5.30 per share, implying a payout ratio of 52%, a record since Foxconn listed in 1991. The cash dividend payout ratio has exceeded 50% for four consecutive years now.
Chairman Liu said that although he attaches great importance to the improvement of gross profit margin, he pays more attention to the maximization of EPS, because only with a higher EPS can more cash dividends be distributed to investors.
He maintained his view from the previous quarter regarding the outlook for 2023. Chairman Liu said the full year outlook for the ICT industry remains neutral, despite relatively conservative visibility due to worries for a slowdown in global economic growth, monetary policy tightening of various countries, and the tapering of pandemic-related product growth. He emphasized the Group will do its best to maintain a stable performance. The operating outlook this year is expected to be roughly flat.
Even with market uncertainties this year, Hon Hai can still grow in three segments - components and other products; computing products; and cloud and networking products, Chairman Liu said. Inflation, exchange rates, and higher personnel costs incurred during the pandemic will affect gross profit margin performance this year, leading the company to continue to prioritize maximizing EPS to create the fullest profits.
The operational outlook for first quarter 2023 is estimated to be roughly flat year-on-year. Sequentially, the anticipated on-quarter decline will be seasonally smaller than usual, reflecting a lower comparison base due to pandemic-affected operations being depressed in the fourth quarter, followed by the boost to January shipments with the return to normal production in Zhengzhou operations, Chairman Liu said.
