TAIPEI -(Dow Jones)- Hon Hai Precision Industry Co. (2317.TW), the world's largest contract electronics maker by revenue, said Saturday its first-quarter net profit increased 3.6% from a year earlier after a wage hike bit into earnings.

Hon Hai, which assembles products for companies including Apple Inc. (AAPL) and Sony Corp. (6758.TO, SNE), said its net profit for the three months ended March 31 rose to NT$14.92 billion from NT$14.40 billion a year earlier.

Its net profit was below the average NT$22.10 billion forecast of eight analysts polled by Dow Jones Newswires, mainly because its operating expenses rose 12% to NT$758.18 billion from NT$676.42 billion a year earlier following a February wage hike for assembly line workers in China.

Expansion costs have weighed on Hon Hai's earnings since the second quarter of 2010, but analysts expect the company's profitability to improve as it nears completion of production facilities in mainland China, where it expanded following a spate of suicides at its main production base in Shenzhen in 2010.

First-quarter revenue rose 8.3% to NT$789.94 billion from NT$729.26 billion a year earlier, it said.

-By Lorraine Luk, Dow Jones Newswires; 8862-25022557;lorraine.luk@dowjones.com