July 26, 2013 / 11:15 AM / 6 years ago

Profit growth returns as Celestica shrugs off BlackBerry loss

(Reuters) - Contract electronics manufacturer Celestica Inc (CLS.TO) posted its first rise in profit in five quarters, sending its stock up the most in two years and allying concerns about its growth after it ended a contract with BlackBerry Ltd (BB.TO).

The 19 percent rise in profit in the second quarter was partly due to stronger-than-expected demand at the Canadian company’s fastest growing and largest unit, communications, which makes networking equipment for telecom companies.

Chief Executive Craig Muhlhauser said the company was shifting its focus to communications and diversified businesses, away from the consumer business.

Sales from Blackberry, part of the company’s consumer business, accounted for about 12 percent of revenue last year. Analysts have questioned the company’s growth prospects ever since the company lost the contract.

The Toronto-based company’s current-quarter revenue forecast indicated a fall of 9 percent at the most, much less than the 14-19 percent fall in the past four quarters.

The diversified business accounted for a fourth of second-quarter revenue, while communications accounted for 42 percent and consumer was the smallest of the five units with a 7 percent contribution to total revenue.

“We are not pursuing consumer opportunities,” Muhlhauser said in an interview to Reuters.

Celestica also makes servers for manufacturers such as IBM (IBM.N), Cisco (CSCO.O) and Juniper Networks Inc (JNPR.N).

The company’s shares rose 9 percent to C$10.69 in morning trade on the Toronto Stock Exchange on Friday.


The company’s net income in the second quarter rose to $28.0 million, or 15 cents per share, from $23.6 million, or 11 cents per share, a year earlier. The year-ago quarter included substantial costs related to a restructuring.

Adjusted profit fell 18 percent to $38.6 million, or 21 cents per share, but topped estimates of 17 cents per share, according to Thomson Reuters I/B/E/S.

Total revenue fell 14 percent to $1.50 billion in the second quarter but topped analysts’ expectation, helped by a 12 percent rise in sales from communications business.

The company expects an adjusted profit of 17 cents to 23 cents per share for the third quarter on revenue of $1.43 billion to $1.53 billion in the third quarter.

Analysts were looking an adjusted profit of 20 cents per share, on revenue of $1.51 billion.

Writing by Sayantani Ghosh in Bangalore; Editing by Saumyadeb Chakrabarty and Savio D'Souza

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