Hon Hai, the world's largest electronics parts maker, posted a market-beating 26 percent jump in second-quarter earnings on Monday due to improving global demand and a smaller tax bill at some of its manufacturing bases.
The Taiwan maker of gadgets such as Apple's iPhone and Nintendo's Wii console made a net profit of T$15.03 billion ($456 million) in the April-June period, based on Reuters calculations using company figures.
Hon Hai reported a net profit of T$28.37 billion for the first half of the year and earned T$13.34 billion in the first quarter, company figures showed.
The second quarter earnings exceeded market forecasts for a T$11.23 billion net profit, and was also higher than the T$11.9 billion recorded a year ago.
A large part of the rise in net profit could be due to lower taxes in the first half of this year, which analysts attributed to Hon Hai receiving tax incentives for moving its factories into smaller cities in certain countries.
Its half-yearly tax bill shrank to T$5.38 billion, some 45 percent smaller than a year ago, according to company figures.
Besides obvious cost reductions, Hon Hai has been moving its factories into lower-tier cities that are very keen to get them and are dangling carrots like tax reductions, said Ellen Tseng, an analyst at Nomura Securities.
The firm said visibility remained short, and that it intended to extend its capabilities in software, nano-technology applications and robotics, diversifying away from its traditional manufacturing stronghold.
It did not give any further forecast in the statement, but its chairman Terry Gou had said earlier this year the company aimed for revenue growth of 30 percent for the year.
Revenue in the second quarter rose over 9 percent from a year earlier to T$433.8 billion, based on Reuters' calculations using company figures, in signs that Hon Hai's clients were becoming increasingly confident that consumer demand was improving.
Despite the general uncertainty and a challenging industry, under the backdrop of relatively strong computing business, the company managed to gain further market share, Hon Hai spokesman Edmund Ding said in a statement.
Many top tech firms typically do their own design work, but outsource the manufacturing process to contract manufacturers such as Hon Hai and Singapore-based Flextronics, freeing them from having to manage labour-intensive production lines.
(Reporting by Kelvin Soh; Editing by Muralikumar Anantharaman)