Jabil’s Q2 Swings to Loss PDF Print E-mail
Wednesday, 26 March 2008 06:20
ST. PETERSBURG, FLJabil Circuit reported second-quarter net income dropped 273% to a loss of $24 million year-over-year. The EMS company was hit hard by a $42 million restructuring charge.

Second-quarter net revenue was $3.1 billion, up 4% year-over-year. Operating income was $1.6 million, down 96% compared to the same period in 2007.
Core operating income increased 22% to $67.8 million, or 2.2% of net revenue, and core earnings increased 48% to $42 million. Operating margins were 3.2% for the EMS sector and –1% for consumer.
Inventory days increased by four days sequentially, to eight. Cash flow from operations was $134 million, while return on invested capital was 8%, up one point over 2007. Capital expenditures during the quarter were approximately $87 million, including approximately $27 million for expansions in China, India, Poland and the Ukraine.
Sales to consumer markets made up $900 million (29%) of second quarter sales, down 28%, on seasonality. The largest declines came in telecommunications and displays but most sectors experienced a reduction, the company said. Computing and storage were up, however.
The company cautioned about slowing end-markets through the summer. “We expect revenue in the second half of fiscal 2008 to be consistent with the first half of the year, resulting in a year of modest growth, but below our previous expectations,” said president and CEO Timothy L. Main. “It appears the slowdown in end-markets will reduce our growth rate and impede margin expansion for the next quarter or two.”
The company expects third quarter net revenue in a range of $3.05 billion to $3.15 billion. Capital expenditures of $60 million to $80 million are expected for the third quarter, and the company maintains its fiscal 2008 forecast of $250 million to $300 million in capex spending.
The EMS division is estimated to increase by 3% from the second quarter, or 10% on a year-over-year basis. By sector, automotive is expected to increase 10%, reflecting product ramps with a new customer; computing and storage sector is estimated to be flat with the second quarter; industrial, instrumentation, and medical is estimated to increase 8% on growth in medical; and networking and telecom are expected to be flat.
Net revenue for 2008 is expected to be in the range between $12.6 billion and $12.8 billion. The company expects 2008 EMS sales of $8.3 billion, consumer sales of $.8 billion, and AMS sales of $700 million.
On a conference call with analysts, Main said, “We are hitting a pretty significant macroeconomic air pocket here and I don’t think anybody is immune from that. Usually for us, it’s a quarter or two, looking back on previous recessionary periods. Before OEMs get back to outsourcing, they start to look at their own internal operations and outsource a little bit more. Things kind of settle out, some of the weaker players have to exit or get consolidated, creating opportunities for us.”

Last Updated on Wednesday, 26 March 2008 09:38


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