Contract electronics manufacturer Jabil Circuit Inc. (JBL), Wednesday reported a lower profit for the second quarter, as higher costs and other expenses offset revenue growth. Earnings for the quarter fell short of analysts' estimates by a penny, while revenues trumped expectations.
Going forward, Jabil provided a weak guidance for the third quarter, with both earnings and sales indicated to miss current Street estimates.
Jabil said revenues for the second quarter grew 4.3 percent to $4.42 billion from $4.24 billion last year. Analysts estimated revenues of $4.38 billion for the quarter.
However, the benefit of revenue growth was offset by higher manufacturing costs. Cost of revenues increased to $4.09 billion from $3.91 billion last year, which may indicate the increase in spending for making aluminum casings for iPhone 5 for Apple Inc. (AAPL).
Apple is one the main customers of Jabil, however Apple's control of pricing over its suppliers has shrunk Jabil's margins lately. Meanwhile, Jabil has taken steps to expand and diversify itself more. Last month, Jabil agreed to acquire Nypro Inc., a maker of plastic products, for $665 million.
Commenting on the results, Chief Executive Mark Mondello said, "We are pleased with these results for the quarter, despite the obviously challenging macro environment. During the quarter we made great progress on the Nypro acquisition and believe the market opportunities of our combined capabilities are considerable."
St. Petersburg, Florida-based Jabil's second-quarter profit dropped to $88.5 million or $0.43 per share from $97.7 million or $0.46 per share last year. Profit excluding special items decreased to $0.53 per share from $0.58 per share a year ago. On average, 11 analysts polled by Thomson Reuters expected earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
Segment wise, diversified manufacturing services segment, which generates majority of revenues, grew 11 percent, while enterprise and infrastructure division rose 12 percent. High velocity sales slipped 15 percent.
Looking forward to the third quarter, the company expects earnings of $0.40 to $0.48 per share, adjusted earnings of $0.50 to $0.58 per share and revenues of $4.3 billion to $4.5 billion. Analysts currently estimate earnings of $0.61 per share and revenues of $4.52 billion.
JBL closed Wednesday at $19.48, up $0.30 or 1.56%, on a volume of 3.3 million shares on the NYSE. In after hours, the stock slipped $0.60 or 3.08%.
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