Foxconn Q2 profit up 41 percent on iPhone sales, cost cuts

Foxconn's second quarter profit rose 40.8 percent year-on-year on strong iPhone sales and lowered costs by building factories in China.

According to the company's earnings released Tuesday, the manufacturer's net profit for the quarter ending June 30, 2013, hit NT$16.9 billion (US$564 million), an increase from NT$12 billion (US$400 million) in the same period last year.

However, the Taiwanese manufacturer's revenue for the period only rose 0.4 percent year-on-year to NT$896 billion (US$29.9 billion) while its second quarter gross profit margins also fell to 5.8 percent in this quarter, compared to 6.1 percent a year earlier.

While the company did not provide detailed earnings breakdown, the Wall Street Journal (WSJ) said this was helped by strong iPhone sales. Even though Apple's net profit fell 22 percent from a year earlier in its Q3 earnings released last month, it sold 20 percent more iPhones than a year earlier. Foxconn earns more than 40 percent of its revenue from the manufacturing of Apple's devices.

The company had also taken advantage of a Chinese government policy to spur investment in mainland China by boosting operations in Western Sichuan and central Henan provinces, a separate report by Bloomberg noted.

"The profit numbers reflect lower costs as its move of plants to inland China has helped reduce labor costs," Michael On, president of Beyond Asset Management, said in the report. "The second half should be better as Apple will introduce new products."