Bob Buick, a component engineer, works in the engineering and material labs at Celestica's company headquarters in Toronto on May 27, 2013.JENNIFER ROBERTS/The Globe and Mail
Celestica Inc. reports its adjusted earnings were better than expected in the second quarter, amid stronger end-user demand for communications equipment.
The Toronto-based electronics manufacturing company, which reports in U.S. currency, reported 21 cents (U.S.) per share of adjusted earnings – down a penny from last year but far better than Celestica or analysts had expected.
Analysts had been looking for Celestica to deliver 17 cents per share of adjusted EPS – midway in the company's range of between 13 and 19 cents per share.
Celestica also beat expectations in terms of revenue and net income.
"We generated strong free cash flow and improved our return on invested capital, driven by stronger than expected demand in our communications end market," said Craig Muhlhauser, Celestica's president and chief executive officer.
The company knew it would take a hit from losing BlackBerry Ltd. as a customer as a result of the smartphone company's slimmed-down strategy.
As it turned out, Celestica's revenue was $1.495-billion – down 14 per cent from a year earlier but up three per cent if BlackBerry were excluded.
Analysts had estimated the manufacturing services company, which operates factories around the world that make products for other companies, would have $1.438-billion of revenue – down from $1.744-billion last year.
The communications segment accounted for 42 per cent of Celestica's overall revenue in the three months ended June 30, up from 40 per cent in the previous quarter ended March 31 and up from 32 per cent a year earlier.
The big decline was in Celestica's consumer products sector, which accounted for only 7 per cent of total revenue in the latest quarter, down from 21 per cent a year earlier.
Celestica also reported 15 cents per share of net income, up from 11 cents per share and above the analyst estimate of eight cents of net income.
"Despite the challenging economic environment, we are projecting continued growth in our diversified end market for the third quarter," Muhlhauser said in a statement.
He also announced Celestica expects to buy back shares through a normal course issuer bid that it intends to launch this quarter.
The company estimates it will deliver between 17 and 23 cents of adjusted earnings during the current quarter, which ends Sept. 30. Celestica's guidance also calls for between $1.425-billion and $1.525-million of revenue.