UPDATE 1-Foxconn Intl posts worst-ever first-half net loss

HONG KONG Mon Aug 27, 2012 7:08pm IST

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HONG KONG Aug 27 (Reuters) - Foxconn International Holdings Ltd (FIH), the world's biggest contract maker of cellphones, posted its worst-ever first-half net loss due to dismal orders from key clients such as Nokia Oyj hit by the economic slowdown.

FIH warned uncertainties in global handset demand were dimming its outlook for the rest of the year and said management would focus on cutting costs in the handset sector, plagued by cut-throat price competition as vendors battle for market share.

"Looking forward, challenging economic conditions around the world may continue to cast uncertainties in our business environment. The management team remains cautious over the future handset market conditions in 2012," FIH said.

"Our key focus going ahead will be to do our best in controlling costs. We have a series of measures in place and one of them is to increase automation in certain parts of our production line," spokesman Vincent Tong added.

FIH, whose parent Foxconn Technology Group helps assemble Apple Inc's iPhones and iPads, reported a net loss of $226.07 million for the January-June period, starkly bigger than a $17.65 million loss a year earlier, it said in a statement.

FIH itself does not make Apple products.

That was FIH's widest first-half loss since it listed in 2005, executives said.

The company, which does not post quarterly results, logged a first-half net loss for a fourth straight year with its latest results worse than a consensus forecast for a $38 million net loss, according to four analysts polled by Reuters.

The company said the handset sector was hit by the European and global economic slowdown.

"Tier-two (mobile phone) makers, such as HTC, LG Electronics or even Sony, are either struggling themselves or their ODM (original design manufacturer) orders are too small for Foxconn International," Laura Chen, an analyst with BNP Paribas in Taipei, said in a report before the earnings release.

FIH issued a warning in April that its first-half loss would widen because of rising costs and keen price competition in the smartphone sector.

Foxconn International's shares, whch have fallen over 40 percent this year, ended 2.9 percent higher before the results.

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