The net loss included a $36.8 million valuation allowance for deferred tax assets, and $3.8 million in restructuring and impairment costs. The company cited higher-than-expected startup costs for its facility in Penang, Malaysia, and the closing of its Bothell, WA, plant.
The company guided for revenue growth of 15 to 18% in fiscal 2005.
For the year Plexus reported a net loss of $31.6 million on revenues of $1.04 billion. The company reported pro-forma net income of $13.5 million, excluding one-time items.
In 2003, Plexus had sales of $807.8 million and a net loss of $68 million.
"As we look to fiscal 2005 our primary objective remains to increase profitability," said president and CEO Dean Foate, in a press statement. "We expect to achieve this goal with improvements in capacity utilization and operating efficiencies through a combination of moderate revenue expansion and lean manufacturing and inventory management initiatives."
"For first fiscal quarter, we are initiating revenue guidance of $280 million to $290 million," Foate said.
Gordon Bitter, Chief Financial Officer, added, "Despite higher .
The China currency issue has become a political football because of manufacturing's insistence on a substantial revaluation and the Bush Administration's stated reluctance to hold China's feet to the fire. Hoping to capitalize on the issue's high profile in the November elections, U.S. labor, textile, and steel groups on Sept. 9 filed a petition known as a Section 301 seeking a formal investigation into China's currency policy. Hours later, administration officials denied it.
On Sept. 30, one Republican and seven Democratic senators joined nearly 20 House Democrats in refiling the petition. While a spokesperson said the Administration would meet with Congressional members, there is no indication any punitive actions against China would be taken.
A coalition of trade groups known as the Fair Currency Alliance has spent the past year pushing for a steep revaluation of the Chinese yuan. The FCA wants 40%, a number arrived at that because, according to one FCA member there are data to justify it and it gave some room to negotiate.
However, disagreement in the ranks prompted the FCA to redraft the petition but the actual refiling was left to the AFL-CIO. The FCA, whose members include the National Association of Manufacturers and IPC, operates on unanimous consent, IPC spokesperson John Kania told Circuits Assembly, and there was "heated debate" among its members as to whether to proceed with the filing. The AFL-CIO, steel and textiles industries advocating filing and NAM was strongly against it, according to Kania. While not saying the IPC was against filing, Kania said the group didn't want to alienate the Bush Administration. (Kania, who doubles as IPC's liaison to the SMEMA Council, a group of assembly equipment makers, said the council supports the petition because it affects customers.)
China's currency policy has for years rankled many U.S. economists and trade groups. China has said on several occasions it plans to comply with WTO currency rules but has yet to move in that direction. Says Kania, "The view of the Administration is that the Chinese knows they have a problem. They need to slow down their economy. Inflation is rampant, but to control it they need to raise interest rates." And China needs 8% annual growth just to absorb the crush of new workers, Kania says.
Kania expects that a Kerry presidency would mean more action, at least. "He's going to have to do something for manufacturing. Labor really backed him."
HELSINKI, Oct. 27 -- EMS firm Elecoteq said third-quarter sales rose 67% to 828.7 million euros and operating income spiked too, led by demand in Europe and the Asia-Pacific.
For the September quarter operating income was 20 million euros, up from 6.6 million euros last year, aided by a one-time value-added tax refund of 2.3 million euros.
For the past year return on capital employed was 21.3%.
Year to date net sales are up 38%, to 2.1 million euros, and operating income is 50.6 million euros, up from 13.6 million euros.
In a press statement, Eloteq said production was strong in its terminal products business, especially in Europe. Terminal products includes handsets and accounts for 80% of the company's overall sales. However, profitability was weakened by production problems in its communication network equipment business, a problem Elcoteq says will be "largely rectified" during the current quarter.
During the third quarter Elcoteq added staff in Estonia, Hungary and Mexico and now has nearly 3,400 more employees in those areas than this time last year.
Elcoteq guided for Q4 net sales and operating income from business operations to be on par with the third quarter.
Flextronics already designs cellphones, PCs and other electronics for Nokia, Sony-Ericsson and H-P. It has signaled iin recent quarters its plans to increase its design work, which offers better margins than board assembly.
Speaking here at the opening of the PT/Expo COMM exhibition, a telecom show, president Remko Rosman said thhe global market for passives will grow 12 to 15% in 2005, reported DigiTimes. However, prices for passives are expected to fall 8% during the same period, Yageo reportedly said.
Yageo forecast its sales in China will grow 20 to 25% next year. Starting next year, the company will lower production at its Holland plant, DigiTimes reported.
Several leading solder suppliers Circuits Assembly spoke with shared insights on the causes for the price spikes - and how to plan for future volatility. Most fingered - surprise - China's consumption, coupled with refining bottlenecks, as the main culprits. While several factors are at play, most vendors agree with Kester vice president of marketing and business development Dave Torp, who cites "basic market supply/demand relationships." Excess supply in the late 1990s and early 2000s depressed prices, causing suppliers to close mines. (While not outright casting the world's tin suppliers as a cartel, vendors note it's a "relatively tight-knit group.") Since 2000, China, which produces at least half the world's tin, has shifted from a major exporter to a net importer, and that nation's energy crisis has dampened its smelting output. Other forces are the tech comeback and higher tin content in new solders, which are "definitely creating more of a demand," says Rick Black, president of AIM Inc.
Black warns that the ongoing metals inventory purge by the Defense National Stockpile Center (DLA) could exhaust certain tin stockpiles within two years. But, he says, "When the price goes up, so does investment in infrastructure. More metal will be pulled out of the ground." Indeed, few believe tin supplies will suffer from the transition to lead-free, because supply will increase to meet the anticipated demand. "It's a gradual move," says Henkel Electronics president Pat Trippel. "[I]t could be a different story if everyone switches to lead-free in a short period, but we don't expect that to happen."
What that doesn't mean, however, is that lead-free solders will cost the same as tin-lead ones. Says Cookson Electronics Assembly Materials president David Zerfoss: "We've put millions [of dollars] into research for lead-free capable materials and there's a price tag for that and the products themselves are inherently much more expensive." Bar solder contains a higher tin content than pastes, leaving some suppliers more exposed to tin pricing volatility. Zerfoss notes the shift from 63-37 to 90-plus% tin means the same joint will require less solder by 20% by weight to make, but the alloy composition by the weight of the bar will be 34% more. Bottom line: More consumption of tin and silver. Quips Zerfoss: "You cannot sell lead-free at the same price. Lead-free ain't free." Koki director of European support Gordon Clark says the "massive" research and development costs incurred by suppliers of lead-free solders have to be passed on "but in our current economic climate [it] is hard for them to swallow."
Buyers should follow Metals Week or London Metals Exchange futures, vendors advise, to anticipate sharp changes in prices of tin or other metals used in solder. Hard-core watchers can monitor speculative fund managers who play the tin market, as fund movements often have big impacts on market swings, explains Torp. Still, "you don't really know where [spot market pricing] will go," acknowledges Zerfoss. Kester and Koki see continued pressure on tin supply throughout 2005. Says Aim's Black: "I don't think [pricing] will go back anytime soon. There's definitely a shortage of supply right now."
For now, Cookson seems to be the only major firm to publicly warn of possible surcharges. Henkel, Trippel says, "hasn't decided exactly how we're going to handle it. Our customers are aware of the situation. It's something we all face." Henkel is renegotiating some contracts, he says. Clark sees parallels to the transportation industry's reaction to higher oil prices. "Some form of surcharge seems a viable option in order to protect margins, and would be best adopted as an industry norm and should be standardized via the IPC Solder Value Council," he says. Kester claims "constant communications" with customers on pricing and delivery. Black feels many customers are behind the curve. "There's a mindset among many purchasing agents that all incoming merchandise costs must be reduced each year. People kept thinking the price should keep coming down, and ... when prices started to increase, they felt hoodwinked."
Tin is just one of several raw materials hit by price hikes. There have been "significant increases" in prices of isopropyl alcohol, a component in many fluxes. Indium prices have risen from $50 per kilogram to $800. Solder vendors are at the mercy of their suppliers. "The only thing [solder vendors] can control is the cost of manufacturing," not the prices from the mines, Black says. "Typically wire and bar solders move with the market. Paste is different because the metal component as a percentage is a much smaller percentage of its value."
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