News
Investment bank Deutsche Bank today forecast EMS sales to slow through at least the first half of 2005. In a research note, analyst Chris Whitmore predicted 7% year-over-year growth for the industry in 2005.
"We remain concerned about the EMS industry's ability to meaningfully expand margins in the current business environment. We believe continued excess capacity, increasing competition from Asia-based producers and slowing near-term demand trends will likely result in continued margin pressure," Whitemore wrote.
Whitemore said that margin pressures and competition should be "somewhat offset" by restructuring and other cost-reduction activities.
The bank said fourth-quarter 2004 results should be in line with tepid expectations. "We believe most EMS vendors will report in line with our EPS forecasts, despite continued weak end-market demand in the December quarter." The bank's outlook for Sanmina-SCI was cited as "most cautious." "We expect Sanmina-SCI to post December quarter results at the low end of guidance," Whitmore wrote.
GREENVILLE, SC, Jan. 11 -- Kemet Corp. said today that December revenue was down 10% sequentially due to paring of inventories at its distributors. The parts maker said March revenue should improve compared to December.
Speaking at the Needham Growth Conference, chief executive Dr. Jeffrey Graves said, "During our last earnings conference call, we reported that Kemet distributors had built inventory of parts in the June quarter in anticipation of strong growth in their sales in the second half. When their sales growth was more moderate than they expected, in the September quarter they reduced inventory levels, resulting in reduced Kemet revenue in the September quarter. This inventory correction continued into the December quarter."
LOUISVILLE, Jan. 11 -- Sypris Solutions Inc. today bottomed its outlook for the fourth quarter, citing cost overruns and higher training costs.
The company expects to report a fourth-quarter loss of $0.07 to $0.10 per diluted share, compared to prior guidance for earnings of $0.17 to $0.20.
Expected revenue is $121 million to $123 million, which is consistent with prior guidance of $120 to $124 million.
"In many respects, we paid the price for this year's rapid growth during the fourth quarter," said Jeffrey T. Gill, president and chief executive, in a statement. "We experienced inefficiencies associated with rapidly changing demand and continued steel shortages, cost overruns for the installation of new manufacturing cells, increased costs for training people for new programs and additional charges to reflect the growing nature and complexity of the business, among others."
Gill said that while the company has resolved the "vast majority" of its issues, some further short-term expenses are expedted.
A series of programs coming online during the first half are forecast to increase revenues by $50 million to $60 million annually.
The company left its revenue outlook unchanged, with 2005 sales forecast to be up 20% to $500 million to $520 million. It cut earnings to $0.75 to $0.95 per diluted share, versus prior guidance of $1.00 to $1.10.
Sypris is a contract manufacturer of aerospace and defense electronics.
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