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Hon Hai profits fall on relocation costs and slackening demand

Hon Hai Precision Industry (trade name Foxconn; HNHPF.NASDAQ, HHPD.LSE, 2038.HK, 2317.TW) posted third-quarter profit results down 9%, as the company continued to absorb relocation costs and dampened demand, the Wall Street Journal reported. Foxconn has built several new factories in inland areas such as Chengdu, Wuhan and Zhengzhou this year. Labor costs are up to a third cheaper there than in the traditional manufacturing hubs of Shenzhen, where the company faced a spate of high-profile suicides at its facilities last year. Moreover, the company has been investing in more automation, which could lower prices in the long term but comes with a high up-front price tag. Slackening demand in US and European export markets may also be impacting the firm: Sales of Apple’s (AAPL.NASDAQ) iPhones clocked in at 17.07 million in the third quarter, less than the 20 million expected.

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