Flextronics Sales Rise, but Profit Declines

Flextronics International Ltd., the world’s largest contract electronics manufacturer, said Tuesday that higher demand boosted sales, but restructuring costs drove down profit in its fiscal fourth quarter.

The Singapore-based company, which has corporate offices in San Jose, posted net income of $16 million, or 3 cents a share, down 18% from $19.5 million in the same quarter a year ago. Sales rose to $3.8 billion, up 23% from $3.1 billion last year.

Excluding charges from laying off workers and consolidating factories, Flextronics earned $72.8 million, or 13 cents a share, beating analysts’ consensus forecast of $57 million, or 11 cents, according to Thomson First Call.

For its full fiscal year ended March 31, Flextronics lost $352 million, largely because of restructuring costs, on sales of $14.5 billion. It lost $83.5 million the previous year on sales of $13.4 billion.

Analysts said a reviving global economy helped lift the fortunes of Flextronics, which makes products including cellphones for Sony Corp. and Xbox game consoles for Microsoft Corp. A three-year economic slump forced the firm to cut back its global workforce by more than 20%, to 70,000. The gradual recovery has helped nudge employment back up to 81,000.

“Most people would agree that the first three months of this year was a fairly strong quarter for the global economy, and Flextronics has certainly benefited from that,” said Chris Whitmore, an analyst at Deutsche Bank Securities, which owns shares in Flextronics.

Much of the firm’s gains have come from improvements in its mobile phone business and a slight recovery in orders for telecommunications equipment, Flextronics Chief Executive Michael Marks said. But he added, “More or less across the board, things have been firming up for a couple of quarters.”

The company bumped up its sales forecast for the current quarter ending in June to just under $3.9 billion, up $150 million. It also increased its net income forecast by 2 cents, to 14 cents a share.

Flextronics shares, which rose 3 cents to $18.46 on Nasdaq, fell as low as $17.57 after hours following the announcement.