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Celestica profit hit by restructuring costs

Celestica profit hit by restructuring costs

Andy Hoffman/The Globe and Mail

Celestica Inc. reported a sharp drop in its latest quarterly profit Tuesday as the contract electronics manufacturer was hit by restructuring and lower revenue as it wound down its work for Research In Motion Ltd.

The Toronto-based company said it earned $7.2-million (U.S.), or 4 cents per share, for the quarter ended Dec. 31, compared with a profit of $69.2-million, or 32 cents per share, 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, or 25 cents per share, compared with $71.1-million, or 33 cents per share, a year ago.

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In July, 2012, Celestica estimated total restructuring charges of between $40-million and $50-million following the loss of the RIM work, but said Tuesday 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 president and chief executive officer 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 Mr. 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 per cent of its full year revenue last year compared with 19 per cent 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, and adjusted net earnings per share to be in the range of 11 cents to 17 cents.

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

"We're expecting a challenging first half of 2013, with projected earnings of 2 to 2.5 per cent based on our current customer forecast," he said. "We are focused on driving revenue growth and long term value as we continue to invest in our business."

For its full year, Celestica earned $117.7-million, or 56 cents per share, on $6.51-billion in revenue. That compared with a profit of $195.1-million, or 89 cents per share, on $7.21-billion in revenue in 2011.

Shares in the company, which reported its results after the close of markets, gained 6 cents (Canadian) to $8.56 on the Toronto Stock Exchange.

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 Ltd. and was later sold to Onex Corp., one of Canada's largest investment companies with interests in aerospace, health care and many industrial and services sectors.

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