Celestica reports sharp profit drop, but has plans to grow earnings

Electronics manufacturer reports $7.2 million in profits in Q4, down from $69.2 in the same period a year ago.

January 23, 2013   by The Canadian Press

TORONTO—Celestica Inc. has reported a sharp drop in its latest quarterly profits after the contract electronics manufacturer was hit by restructuring and lower revenue as it wound down its work for Research In Motion.

The Toronto-based company, which keeps its books in US dollars, said it earned US$7.2 million for the quarter ended Dec. 31 compared with a profit of $69.2 million a year ago.

Excluding stock-based compensation and other one-time charges including amortization of intangible assets and restructuring charges, the company said it earned an adjusted profit of $50.3 million compared with $71.1 million a year ago.

Celestica supplies components and equipment in the communications, computer, telecom aerospace, defence and other markets.

The firm used to be a division of IBM Canada and was later sold to Onex, one of Canada’s largest investment companies with interests in aerospace, health care and many industrial and services sectors.

In July 2012, Celestica estimated total restructuring charges of between $40 million and $50 million in the wake of the loss of the RIM work, but said that would now come to between $55 million and $65 million by the time it was complete at the end of June.

The company said it recorded $16.7 million of this in the fourth quarter and $44.0 million for the full year.

Revenue for what was the company’s fourth quarter totalled $1.5 billion, down from $1.75 billion.

Celestica CEO Craig Muhlhauser said the earnings release could be categorized as “mixed,” but assured analysts on a conference call there is a plan to improve profit this year.

“Our priorities are to achieve profitable growth, further increase the mix of diversified business and to accelerate the penetration of higher-value-added services with our current and new customers,” said Muhlhauser. “We remain confident in our strategy which includes diversifying our revenue and customer base.”

The company said revenue from RIM was minimal in the fourth quarter and accounted for about 12% of its full year revenue last year compared with 19% in 2011.

In its outlook for the first quarter of 2013, Celestica said it expected revenue to be in the range of $1.325 billion and $1.425 billion.

Mulhauser said “difficult decisions” will continue to be made in what is anticipated to be a “slow growth environment” in the coming year.

For its full year, Celestica earned $117.7 million on $6.51 billion in revenue. That compared with a profit of $195.1 million on $7.21 billion in revenue in 2011.

©The Canadian Press

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