With the end of the winning season, we get a solid picture of how profoundly the COVID-19 pandemic has affected corporate earnings. Taiwan-based manufacturing giant Foxconn is one of the companies that was completely overwhelmed in the past quarter. Downtimes – particularly in China – led to a 90% drop in profit compared to the previous year.
Foxconn had already tried to prepare investors for bad news in March. At this point, due to the unprecedented uncertainty of the virus, the company did not give a clear indication of what its profits would look like for the rest of the year. “Preventing outbreaks, resuming work, and manufacturing are top priorities for us,”
Uncertainty persists two months later. “The visibility of our prospects for the year is limited,” added Liu when calling this week. “At the moment I can’t offer the outlook for the second half of this year.” However, the executive added that the company expects sales declines to be far less pronounced in the next quarter.
This is partly due to the fact that most Chinese plants resumed normal production after the closure in late January. The country comprises around three quarters of Foxconn’s production capacity. However, there will still be less than optimal numbers as smartphone sales for many companies are expected to continue to decline or stagnate, reducing demand for Foxconn services.
Apple, one of Foxconn’s key customers, is believed to be delaying the release of its next flagship due to consumer demand issues and supply shortages.