Foxconn’s profits plunged nearly 90% due to COVID-19 shutdown

As earnings season winds down, we’re getting a solid picture on just how profoundly the COVID-19 pandemic has impacted corporations’ bottomline. Taiwan-based manufacturing giant Foxconn is among those companies that were utterly walloped over the previous quarter. Plant shutdowns — particularly in China — led to a 90% year-over-year drop in profits for the quarter.

Foxconn had already attempted to brace investors for bad news back in March. At the time, the company failed to give a clear indication of how its profits would look for the rest of the year, owing to the unprecedented uncertainty of the virus. “Prevention of outbreak, resumption of work and production are our top priority,” Chairman Liu Young-Way said at the time.

Two months later, uncertainty remains. “The visibility of our outlook for the whole year is limited,” Liu added on this week’s call. “Right now, there is no way I can offer the outlook for the latter half of this year.” The executive added, however, that the company expect revenue declines to be far less pronounced over the next quarter.

iPhone sales are down, ahead of uncertain times for the industry

That’s due, in part, to the fact that it has resumed normal production at most of its China plants following the late-January shutdown. The country comprises around three-quarters of Foxconn’s production capacity. There will, however, continue to be less than optimal numbers, as smartphone sales are expected to continue to decline or stagnate for many companies — driving down demand for Foxconn’s services.

Apple, one of Foxconn’s key clients, is believed to be delaying the release of its next flagship over issues of consumer demand and supply chain shortages.