Financial Performance - For the six months ended June 30, 2023, the company reported revenue of $2,676.7 million, a decrease from $4,125.3 million in the same period of 2022, representing a decline of approximately 35.2%[10]. - The cost of sales for the same period was $2,637.1 million, down from $4,043.6 million, resulting in a gross profit of $39.6 million compared to a gross profit of $81.7 million in 2022[10]. - The company incurred a loss before tax of $29.6 million, compared to a loss of $19.0 million in the prior year, indicating a worsening financial performance[10]. - The net loss attributable to the owners of the company for the period was $50.0 million, compared to a loss of $23.8 million in the same period last year, reflecting an increase in losses of 110.5%[12]. - The total comprehensive loss for the period was $202.9 million, compared to a total comprehensive loss of $220.6 million in the previous year, showing a slight improvement[12]. - The company reported a basic loss per share of $0.6 cents, compared to a loss of $0.3 cents per share in the same period of 2022, reflecting a deterioration in per-share performance[12]. - The company recognized a fair value loss on investments amounting to $78.9 million for the period, compared to a loss of $61.8 million in the previous year, highlighting challenges in investment performance[11]. - The company reported a consolidated revenue of $2,677 million for the first half of 2023, a decrease of $1,448 million or 35.1% compared to the same period last year[155]. - The gross profit margin for the period was 1.48%, down from 1.98% in the previous year, primarily due to weakened smartphone demand and intense competition[169]. - The company recorded a net loss attributable to shareholders of $50 million, compared to a net loss of $23.8 million in the same period last year[169]. Assets and Liabilities - As of June 30, 2023, total assets were reported at $3,765.3 million, a decrease from $4,486.9 million in the previous year, indicating a decline in asset value[13]. - Total assets decreased from $1,801,858 thousand to $1,595,163 thousand, a decline of approximately 11.5%[15]. - Current liabilities increased to $2,704,356 thousand, with a notable rise in bank borrowings to $676,054 thousand[15]. - Shareholders' equity attributable to the company decreased from $1,781,653 thousand to $1,577,164 thousand, a reduction of about 11.5%[16]. - Cash and cash equivalents decreased from $1,825,109 thousand to $1,241,398 thousand, a decline of approximately 32%[14]. - The company has a total of $3,074,080 thousand in current assets, down from $3,708,432 thousand, a decrease of approximately 17%[15]. - The total amount of trade and other receivables as of June 30, 2023, was USD 1,518,805,000, compared to USD 1,905,645,000 as of December 31, 2022[53]. - The group recognized an expected credit loss provision of USD 142,131,000 for trade receivables as of June 30, 2023, an increase from USD 91,668,000 as of December 31, 2022[55]. Cash Flow and Investments - The net cash used in operating activities for the six months ended June 30, 2023, was $(628,791) thousand, compared to $(212,759) thousand for the same period in 2022, indicating a significant decline in operational cash flow[19]. - The net cash used in investing activities was $(38,239) thousand for the six months ended June 30, 2023, compared to $(91,947) thousand in the previous year, showing an improvement in cash outflow for investments[18]. - Cash and cash equivalents decreased by $(559,484) thousand during the six months ended June 30, 2023, compared to a decrease of $(131,343) thousand in the same period of 2022[18]. - The financing activities generated a net cash inflow of $107,546 thousand for the six months ended June 30, 2023, compared to $173,363 thousand in the same period of 2022, indicating a decrease in financing cash flow[18]. - The company reported a cash outflow of $(35,235) thousand for the purchase of property, plant, and equipment in the first half of 2023, down from $(59,241) thousand in the same period of 2022[19]. Market Conditions and Economic Outlook - The smartphone market is experiencing a decline in demand and production, particularly in emerging markets like Southeast Asia and Africa, due to the strong U.S. dollar making phones more expensive[99]. - High inflation and geopolitical tensions are suppressing consumer spending, leading to a cautious approach in order placements by customers[100]. - The company anticipates ongoing volatility in its operational performance, particularly influenced by seasonal factors and market conditions[91]. - The company is diversifying its business risks by expanding into product categories beyond smartphones[102]. - The ongoing geopolitical tensions and the impact of the Ukraine crisis have led to a significant decline in global demand for Chinese goods[102]. - The smartphone market is facing significant challenges due to economic downturns, with consumer spending being highly cautious, particularly in low-cost and prepaid segments[132]. - The company is closely monitoring global news and planning cautiously to address uncertainties and potential recession risks in the second half of 2023[188]. Operational Strategies and Restructuring - The company has been actively restructuring its operations and reducing costs to improve efficiency and adapt to uncertain demand conditions, with ongoing efforts to streamline operations into 2023[97]. - The company is focusing on diversifying revenue contributions from mobile phones to mitigate risks associated with reliance on single customers, products, and regions[104]. - The company is committed to business diversification and transformation to enhance long-term sustainability and competitiveness in the OEM/ODM sectors[105]. - The company is actively managing risks through strategies related to capital structure, cost control, and operational efficiency to adapt to the current volatile environment[105]. - The company is undergoing significant layoffs in North China to optimize personnel allocation due to declining demand and high inventory levels[192]. Research and Development - Research and development expenses for the period were $26.5 million, down from $37.4 million in the previous year, indicating a reduction in R&D investment[10]. - The company is investing in R&D capabilities to meet the evolving demands of customers in terms of performance, cost, and time-to-market[105]. - The company is expanding its global design team to provide flexible solutions and expertise aimed at reducing overall product costs and accelerating time-to-market[105]. - The company is committed to enhancing its R&D capabilities by investing in a global R&D team across China, Taiwan, India, and Vietnam to support significant business growth opportunities[151]. Customer Relationships and Sales - The company has established long-term relationships with four of its top five customers for over five years, indicating a stable revenue stream despite market fluctuations[133]. - The group has established a dedicated business development team to expand its customer base, focusing on new customers with good market growth potential and long-term relationship stability[128]. - The company is focusing on maintaining long-term partnerships with customers, suppliers, and logistics partners to navigate business challenges[145]. - The company is actively seeking to optimize order utilization and reduce costs by terminating unprofitable services[108]. Employee Management and Corporate Governance - The total number of employees as of June 30, 2023, was 42,575, down from 44,055 on December 31, 2022, resulting in a total employee cost of $132 million for the period, a decrease from $187 million in the first half of 2022 and $184 million in the second half of 2022[151]. - The company has implemented a new share plan and a new stock option plan approved by shareholders on May 19, 2023, allowing the board to grant share rewards or stock options to eligible employees[152]. - The employee turnover rate is maintained between 15% to 18%, which is better than competitors, reflecting strong employee retention strategies[149]. - The company has upgraded its salary and performance evaluation systems in 2023 to enhance operational efficiency[148]. Future Plans and Spin-off - The company plans to spin off its Indian subsidiary BFIH, one of India's largest electronic manufacturing service providers, and aims for an independent listing on major Indian stock exchanges[184]. - A special cash dividend will be proposed to shareholders, amounting to no less than 40% of the net proceeds from the sale of BFIH's existing equity shares, contingent upon the successful completion of the spin-off[184]. - The spin-off timeline has been delayed due to current market conditions, with intentions to proceed when the market improves[185].
富智康集团(02038) - 2023 - 中期财报