April 24, 2012 / 2:12 PM / 5 years ago

Celestica net profit rises, says demand stabilizing

(Reuters) - Celestica Inc (CLS.TO), a contract electronics manufacturer, posted a 44 percent rise in its first-quarter net profit and said customer demand is stabilizing.

However, Celestica -- which produces smart phones, servers and other products on behalf of branded manufacturers such as Research In Motion RIM.TO RIMM.O, IBM (IBM.N) and Cisco -- said visibility remains limited.

The company is seeking to move beyond the razor-thin margins of its consumer, telecom, storage, server and enterprise communications unit by growing its diversified manufacturing operations.

It bought chip-making equipment operations from Brooks Automation (BRKS.O) for that purpose last year.

Celestica expects an adjusted second-quarter profit of 20 cents to 26 cents per share on revenue of $1.65 billion to $1.75 billion.

Analysts on an average are expecting 25 cents per share, on revenue of $1.72 billion, according to Thomson Reuters I/B/E/S.

Celestica’s stock has been depressed since early 2011, in part on investor fears over exposure to major customer RIM, which has shipped declining volumes of BlackBerry smart phones in three of its last four quarters and makes up about 20 percent of Celestica’s sales.

The company may, however, benefit from RIM’s decision to reduce the number of production locations, as Celestica is involved in the production of better-performing RIM products such as the Bold 9900 and Curve 8520.

Celestica’s net profit in the quarter rose to $43.2 million, or 20 cents per share, from $30 million, or 14 cents per share, a year ago.

On an adjusted basis, profit fell slightly to $53.6 million.

Revenue fell 6 percent to $1.69 billion.

Shares of the Toronto-based company, which has a market capitalization of $1.72 billion, closed at C$8.36 on Monday on the Toronto Stock Exchange.

Reporting by Bhaswati Mukhopadhyay in Bangalore and Alastair Sharp in Toronto; Editing by Roshni Menon

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