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Electronics Production | October 21, 2011

Flextronics increase 2Q net sales 8% YoY

Net sales for the 2Q/2011 (ended September 30, 2011) increased USD 622 million or 8% to USD 8.0 billion for EMS-provider Flextronics. This compares to net sales for the quarter ended October 1, 2010 of USD 7.4 billion.
Adjusted operating income for the second quarter ended September 30, 2011 decreased $37 million or 17% to $176 million, compared to $213 million for the quarter ended October 1, 2010. Adjusted net income for the second quarter ended September 30, 2011 was $158 million, a decrease of $21 million or 12%, and adjusted EPS decreased $0.01 or 4% to $0.22, compared to $179 million and $0.23, respectively, for the same quarter last year.

"From a revenue growth perspective, our business performed well in the quarter despite the sluggish macroeconomic backdrop. Outside of our Industrial and Emerging Industries business group, our three remaining groups grew both sequentially and year-over-year driven by new outsourcing programs" said Mike McNamara, CEO of Flextronics. He continued, "We have accelerated our exit of the ODM PC business, which will be completed in the December quarter. The exit of this business has been a major initiative that we have been managing over the past couple of quarters and after completion we expect to realize improved operating profit performance."

"We generated USD 176 million of free cash flow for the quarter as we continue to tightly manage our working capital. This strong cash generation aided the repurchase of more than 19 million ordinary shares with a cost of slightly more than USD 100 million," said Paul Read, CFO of Flextronics. "This week we also closed a new USD 2 billion credit facility."

Renewal of Revolving Credit Facility

On October 19, 2011, the Company entered into a USD 2.0 billion credit facility consisting of a USD 1.5 billion revolving credit facility and a USD 500 million term loan facility, which matures in October 2016. The USD 1.5 billion revolving credit facility replaces the Company's existing USD 2.0 billion revolving credit facility. The USD 500 million term loan facility refinances the Company's existing term loan facility which was set to mature in October 2012. The new USD 2.0 billion credit facility is unsecured, and contains customary covenants.

Guidance

For the third quarter ending December 31, 2011, revenue is expected to be in the range of USD 7.3 - 7.7 billion which includes a sequential reduction of approximately USD 550 million of ODM PC revenue associated with the accelerated exit of this business.

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