SINGAPORE (dpa-AFX) - Contract electronics manufacturer Flextronics International Ltd. (FLEX), said Wednesday its first quarter profit slipped from last year as customers cut down orders amid tough economic conditions, leading to a 20 percent drop in sales. Results also reflect an increased loss from discontinued operations, somewhat offset by improved gross margin and lower interest expense. Nonetheless, the company's quarterly earnings topped Street estimates by a penny, while revenues missed expectations.
Moving forward, Flextronics provided a weak outlook for the second quarter.
CEO Mike McNamara said, 'Despite the challenging economic environment, we achieved our targeted operating margin and our adjusted EPS improved 10% compared to the same quarter last year. We have accomplished a transformation of our business to our desired portfolio model, which will lead to further margin expansion over the course of fiscal year 2013.'
Flextronics provides advanced design and electronics manufacturing services to original equipment manufacturers. Its customers include Dell, Hewlett-Packard, Microsoft, Cisco, among others. But weak economic climate has resulted in some customers cutting down on orders, thereby impacting revenues.
Singapore-based Flextronics reported first quarter net income of $128.5 million, a decline from $132 million last year. However, on a per share basis, earnings improved to $0.19 from $0.17, on a lower share count.
Excluding items, earnings for the quarter were $146.8 million, compared to $157 million a year earlier. On a per share basis, earnings were flat with last year at $0.21.
On a continuing operations basis, adjusted earnings for the quarter were $0.23 per share. On average, 12 analysts polled by Thomson Reuters expected earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter totaled about $6 billion, compared to $7.5 billion last year. Ten analysts had consensus revenue estimate of $6.07 billion for the quarter.
Flextronics has forecast second quarter adjusted earnings of $0.21 to $0.25 per share on revenues of $5.9 billion to $6.3 billion. Analysts currently expect earnings of $0.25 per share on revenue of $6.44 billion for the quarter.
Among others in the industry, Jabil Circuit Inc. (JBL) last week reported a decline in its third quarter profit, hurt by one-time charges and higher tax expense, amid subdued growth in revenue. The company also provided a weak guidance for the fourth quarter.
FLEX closed Wednesday at $6.25, up 3.14%, on a volume of over 5.4 million shares on the Nasdaq. In after hours, the stock gained 0.15%.
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