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Foxconn daddy's shares slip on weak Q1 profit

Hon Hai is spending more on staff and new factories

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Foxconn's parent company Hon Hai's shares dropped 7 per cent today after it announced weaker profits than expected in the first quarter.

Hon Hai reported a net profit of NT$14.9bn ($510.8m, £314m) for the quarter, down just a little from the same period last year when the firm made NT$15.3bn ($523.2m, £322m).

The group's costs have been rising as staff wages go up in China and political pressure is applied to improve working conditions at its Foxconn factories – so profits are down despite a rise in revenue.

Hon Hai said revenue for the quarter was NT$50.8bn ($1.7bn, £1.07bn), up from NT$48bn ($1.6bn, £1.01bn) in the same quarter of 2011.

Foxconn manufactures components for tech giants like Apple and Nintendo, but the profit margins on hardware have never been great, regardless of how popular the final product ends up being.

Often the big boys in IT make their money from software and services on their gear, rather than the actual bits of kit.

Foxconn is also reportedly building new factories in the interior of China as well as five new facilities in Brazil.

The secretary of Planning and Regional Development for Sao Paulo announced the new Brazilian fabs in February, but neither he nor Foxconn gave out too much information on the plans. ®

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