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© melpomenem dreamstime.com Electronics Production | April 21, 2016

Benchmark evaluates global footprint after disappointing Q1

EMS provider Benchmark Electronics is loosing traction – during the first quarter of 2016 the company recorded both decreasing revenues and profit.
"This quarter highlighted the strategic importance and merits of our shift to higher-value sectors, as both computing and telecommunications end markets slowed markedly from last year," Gayla Delly, Benchmark's President and Chief Executive Officer, states in the company's Q1 report.

Benchmark's new sales decreased YoY from USD 621 million in Q1 last year, to USD 549 million for the first quarter 2016.

Net income in the first quarter of 2016 amounted to USD 11 million, a decrease from the previous quarter of USD 39 million and YoY from USD 14 million.

Operating margin stayed flat from the first quarter last year at 3% - but decreased compared to the previous quarter when it hit 3.5%.

"Our first quarter results were impacted by late-quarter demand reductions in certain end markets, including orders from our largest computing customer. While we are disappointed with the top line revenue and the resulting impact on operating margin this quarter, increasing our share of higher-value end markets to 64% positions us well to deliver future growth and margin enhancement," Gayla Delly continued.

"Importantly, 75% of our first quarter new program bookings were from our targeted higher-value markets, which are characterized by higher margins, longer lifecycle products and customers requiring higher value-added and engineered solutions. These bookings are expected to result in annualized revenue of USD 110 – USD 140 million when fully ramped in the next 18-24 months."

While Benchmark's strategic trajectory remains on track with an improving portfolio mix, near-term market challenges in the traditional sectors are reflected in the company's outlook for the second quarter (revenues of USD 570 million - USD 600 million).

“In light of these challenges, we have intensified our efforts to optimize our global cost structure, including an evaluation of our global manufacturing footprint, which should allow us to continue to improving margins in an uncertain market,” Gayla Delly explains.

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