Hon Hai Technology Group (Foxconn) Announces Second Quarter 2024 Financial Results
－Record 2Q high net profit, 1H margins improve across the board
－AI server revenue surges over 60% in 2Q, strong demand ahead
－3Q overall growth outlook seen higher on-quarter and on-year
－Growth trend to be maintained in 4Q, visibility for full year is better
14 August 2024, Taipei, Taiwan – Hon Hai Technology Group (“Foxconn”) (TWSE:2317) today announced its second quarter 2024 financial results.
Revenue in the April-June period hit NT$1.55 trillion, reaching a record high for the period. Operating profit and net profit were both also record highs for the second quarter. Earnings per share in the second quarter was NT$2.53. Looking forward to the third quarter, which has entered the traditional peak season, operations are expected to warm up. Overall, there will be significant growth in the July-September quarter both on-quarter and on-year. For the full-year 2024, thanks to strong demand for AI servers, the outlook for significant growth is unchanged, but with better visibility.
In the second quarter, revenue rose 19% from a year ago to NT$1.55 trillion; gross profit was up 19% as well, to NT$99.5 billion; operating profit surged 44% to NT$44.6 billion; and net profit (attributable to the owners of the parent company) at NT$35 billion, increased 6%. Gross profit margin, operating profit margin and net profit margin were 6.42%, 2.88% and 2.26% respectively, compared with 6.41%, 2.37% and 2.53% from the same period last year. EPS reached NT$2.53 in the second quarter, up from NT$2.38 a year ago, growing NT$0.15.
Foxconn Chief Financial Officer David Huang said second quarter’s profit margins on a gross and operating basis improved compared to a year ago. Gross profit margin improved to 6.42% mainly due to product mix optimization and revenue increase. Net profit rose 6% from a year ago to NT$35 billion, a record high for the second quarter, resulting in an EPS of NT$2.53, up NT$0.15 at the same time.
For the first half of the year, revenue reached NT$2.875 trillion, up 4% from a year earlier. For the January-June period, gross profit at NT$183.2 billion, rose 7%; operating profit was up 14% to NT$81.4 billion; and net profit (attributable to the owners of the parent company) grew 25% to NT$57.1 billion. Gross profit margin, operating profit margin and net profit margin were 6.37%, 2.83% and 1.98%, respectively, with all three indicators showing improvement compared with 6.21%, 2.58% and 1.66% in the same period last year. EPS reached NT$4.12, compared with the same period last year of NT$3.31, an increase of NT$0.81.
Looking ahead at the third quarter, operations will gradually ramp up entering the traditional peak season. Third quarter will see significant growth, both quarter-on-quarter and year-on- year, and the growth trend will be maintained for the fourth quarter, said Foxconn Vice President and Spokesperson James Wu.
Among the Group's four primary product segments, Wu said strong sequential growth is expected in the third quarter for smart consumer electronics, where new product preparations are underway; cloud and networking products will turn in significant growth, when compared to the previous quarter and the same period a year ago, thanks to ongoing revenue momentum in AI servers; and computing products should decline slightly due to a high base period, but still see significant growth year-on-year.
Finally, strong growth, on-quarter and on-year, is expected for components and other products, where shipments of components related to the core business have increased, including connectors, precision components, lens modules, and automotive products.
Looking into the progress of the customer AI segment, Wu said strong customer demand drove AI server revenue in the second quarter up more than 60% on-quarter, and accounted for more than 40% of overall server revenue for the period. Foxconn combines cloud and networking competencies to become the only supplier with comprehensive AI supply chain vertical integration capabilities that can provide customers with complete solutions.
Wu said strong demand for AI servers is expected to continue. We maintain our view that AI servers will contribute to 40% of overall server revenue this year; at the same time, strong demand for new-generation AI rack solutions from different types of customers that we have seen should make a significant contribution to Foxconn's server revenue in 2025. AI servers should soon become Foxconn’s next trillion-dollar revenue product.
Wu said the latest market conditions indicate revenue growth of AI servers this year is still quite strong, and the existing H series products have good visibility. The outlook for sequential quarterly growth this year in AI server revenue remains unchanged. The development schedule of the GB200 rack is on track. Foxconn will definitely be the first supplier to deliver and shipments should begin in the fourth quarter. If the schedule remains unchanged, the performance of the entire AI server segment may be better than originally estimated.
Development of the Group’s three major platforms based on generative AI – Smart Manufacturing, Smart EV, and Smart City – is moving forward. In smart manufacturing, Wu said the Group is carrying out different-oriented projects with multiple partners simultaneously. This includes introducing GenAI into production processes, building "robot+AI" platforms to improve automation capabilities, and creating a new generation of digital factories.
Regarding smart city, the Group continues to promote comprehensive city-wide solutions services and is currently discussing the establishment of smart city application proof of concept (PoC) with key cities in Mexico. Closer to home, the Group is assisting passenger transport operators in integrating legacy platforms and applications, and supporting the Kaohsiung City Government in upgrading the bus service system, as part of Foxconn’s CityGPT platform solutions.
In smart electric vehicles, more than 5,400 units of the MODEL C by Foxconn subsidiary Foxtron Vehicle Technologies have been delivered through July. Since April, the monthly delivery volume has been steady at more than 1,000 units. Regarding the progress on overseas customers, two traditional Japanese automotive customers and three projects are expected to complete contract signing in the second half of this year.
Turning to semiconductors, Wu said the Group continues to improve the production capacity of the SiC supply chain. Mass production has started on 1,200V MOSFET. At the same time, installation of upstream epitaxy equipment is done and should lead to better capabilities over technology and costs. Downstream, equipment is being installed in module factories one after another and trial production is expected to start in the third quarter.
The specification development of the ADAS SoC chip has been completed in the large IC area. At the same time, relevant functional tests for ADAS target scenarios are being conducted on the chip's software platform.
During the investor call, Foxconn unveiled the first details of its flagship annual technology conference, Hon Hai Tech Day 2024, which will take place over two days on October 8-9. Following the success of last year’s VIP keynotes – from the CEOs of semiconductor powerhouse NVIDIA and German automotive chassis giant ZF – which was the first time any external partner or customer took to the HHTD stage, the event this year will be packed with even more compelling technology talks and exhibitions.
2024/08/14
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