Jabil Recovery Continues, Increases Layoffs
ST. PETERSBURG, FL -- Jabil Circuit reported earnings fell 90% year-over-year to $5.5 million on a 14% drop in sales, but the results still easily beat expectations.
The world's third-largest EMS company reported revenue of $2.8 billion for For the three months ended Aug. 31. The results topped the consensus Wall Street forecast of $2.66 billion, as well as company guidance.
The firm reported growth in all end-markets and segments except of Computing and Storage, which was down 5% sequentially. Industrial, telecommunications and networking all saw strong growth during the period. On a Sept. 29 conference call with analysts, Jabil said that 60% of the growth came from new business and 40% came from upticks in demand.
"Marked improvement in our sequential performance was aided by cost-cutting, increased productivity, market share gains and a more benign end-market environment," said president and CEO Timothy L. Main in a statement.
For its fiscal year, Jabil reported a loss of $1.17 billion, down from earnings of $133.9 million in fiscal 2008, as sales fell 9% to $11.7 billion. As of Aug. 31, Jabil had more than $800 million in cash, and an $800 million revolving credit line.
Jabil also announced plans to sell its automotive electronics manufacturing business in Western Europe in the upcoming quarter, saying it could take charges up to $25 million related to the deal. The company also will lay off a total of 4,500 workers, up from the original plan to cut 3,000 jobs, and take $64 million in restructuring and other charges.
Jabil guided for sales of $3 billion to $3.2 billion in the current quarter. The firm expects operating margins of 3% in the first quarter of fiscal 2010 and 3.1% for the fiscal year. However, visibility remains limited, the company said, and expectations for the next few quarters are for a gradual recovery in demand." Jabil said it expects its Consumer division sales to rise 30% in the current quarter, while EMS sales will be up 3%.
