Jabil Circuit Earnings Rise 76%

It was revealed on Wednesday morning that Jabil Circuit's

second quarter earnings rose a full 76% thanks to its diversified-manufacturing-services business and the fact that the same period last year was hurt be one-time charges. According to the

, CEO Timothy Main said that, “Our continued focus and investment in diversified manufacturing services is paying off for Jabil.” JBL is an electronics contractor, supplying circuit boards used in computers, cars and networking telecom equipment. Its top line has seen the benefit of hefty growth across all of its major business divisions. For the quarter ending February 29, JBL reported a profit of $97.7 million, or 46 cents per share, up from $55.4 million, or 25 cents per share, the previous year. That previous year's period, however, included roughly $38 million in restructuring costs and write-downs related to selling subsidiaries. Back in November, JBL forecast core earnings of 52 cents to 62 cents per share, with $4 billion to $4.2 billion in revenue. Meanwhile, gross margin edged up to 7.6% from 7.5%. The current quarter has seen JBL forecast profit of 60-70 cents per share, with $4.2 billion to $4.4 billion in revenue. Analysts had forecast 65 cents and $4.35 billion. On Tuesday, shares closed at $26.49 and were down 1.9% after hours. Over the past three months, stock is up 33%. In a research report published on Wednesday morning, Goldman Sachs said that Jabil's DMS business increased 3% qoq and 33% yoy, compared to the total business of down 2% and up 8%, respectively. “We have modeled for more than 25% yoy growth for DMS in FY12 and expect this business to reach 46% of sales by the end of this calendar year, up from only 29% in FY09.” Bank of America Merrill Lynch reported that JBL reported stronger than expected Diversified Manufacturing Services (DMS) revenues (+33% Y/Y, vs. guidance of 25% Y/Y, and the est 27% Y/Y); however margins at 5.9% disappointed due to an internal site transition and continued design investments in the Healthcare business. Citi said that JBL continues to invest in their materials technology group (in DMS) which is a high margin segment. JBL guided total capex in FY2012 to be $500m of which 75% will be in DMS. “JBL detailed several steps to improve E&I margins to their targeted 4.0% (vs. 1.7% current) which include growth in Telco, Storage & Networking and improvements in underperforming France/Italy facilities.”