* Hon Hai in "intensive" talks about expansion in Europe-MD
* Says Foxconn CZ sees new projects in '10 in existing lines
* Says surprisingly good Q1, sees flat 2009 revenue
By Martin Dokoupil
PRAGUE, April 15 (Reuters) - Taiwanese electronics firm Hon
Hai Precision Industry <2317.TW> is considering boosting its
capacity in Europe to handle an expected rise in demand in the
next several years, the chief of its Czech unit said.
Foxconn CZ Managing Director Miloslav Rut said the economic
downturn has made order volume much more volatile. But the
supplier to Dell <DELL.O> and Cisco Systems <CSCO.O> was
optimistic it would keep its sales flat this year after a
better-than-expected first quarter that was partly due to an
unexpected rise in orders from the IT sector.
"The first quarter of this year was significantly better
than we had expected for financial results, and revenue was
better than in the first quarter last year ... by percentage
points," Rut told Reuters in an interview late last week.
The company does not release quarterly results.
Revenue was more than 90 billion crowns last year, according
to unaudited figures, Rut said, roughly flat from the previous
year.
Rut said Foxconn CZ had new projects ready for next year
that would be covered by existing capacity before any capacity
boost is cleared by Hon Hai. He did not give any details.
He said Hon Hai was considering expanding its capacity in
Czech Republic and Europe to satisfy growth in demand over the
long term.
"There are intensive talks about these things (capacity
expansion) at Hon Hai Precision Industry's headquarters," Rut
said. "If projects in the works go ahead, there will certainly
be a volume increase, I would say, in tens of percents. This ...
will not only affect the Czech Republic but also other factories
within Europe."
The company plans no big changes to its workforce of 6,000,
he said.
Foxconn CZ is the second biggest Czech exporter after
Volkswagen's Skoda Auto <VOWG.DE>, accounting for some 3.7
percent of overall exports last year. Swings in its output, all
of which is exported, influence the export-driven Czech economy,
which has been struggling in the economy downturn.
Foreign investors, mainly in the automotive and electronics
sectors, have led Czech economic growth over the past decade.
However, it has made the small economy vulnerable to the global
downturn, which has sent exports plunging.
The government now expects a contraction in its gross
domestic product (GDP) of up to 2 percent this year, the first
contraction since 1998.
Manufacturing output dropped 23.4 percent in February and
unemployment shot up to a two-year high of 7.7 percent last
month as companies trimmed jobs due to deepening recession in
the euro zone, their key market.
The global downturn caused a slash in profits last month at
Hon Hai -- contract producer of some of the world's most famous
gadgets, including Apple's <AAPL.O> iPhone and Nintendo's
<7974.OS> Wii game console -- and its cell-phone making unit
Foxconn International Holdings <2038.HK>. []
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However, Hon Hai Chairman Terry Gou said two days before the
company announced the company's poor fourth-quarter results that
the company had increased its Chinese workforce by 5 percent "as
things are not as bad as they have been made out to be".
[]
($1=19.99 Czech Crown)
(Editing by Karen Foster)
