Celestica Inc. shares shot up 26 per cent to their highest price in more than a year today after the contract manufacturer reported a first-quarter profit that beat analyst expectations and said it is "cautiously optimistic" about 2008 despite the U.S slowdown.

"Our demand outlook for the next three months is in line with our previous outlooks," CEO Craig Muhlhauser said in an interview following the company's annual meeting in Toronto.

"We haven't seen any material changes to the demand outlook."

Furthermore, the company's restructuring plan, to be completed by mid-2009, is working and operating margins are improving, said Muhlhauser.

For the past several years the company has undergone a series of significant restructurings, cutting thousands of jobs in the United States, Canada and Western Europe while adding employees in other areas of the world to get its capacity in line with its business strategy and the markets.

The company now "has the most simplified network in the industry which gives us the advantage of having more flexibility and the ability to deal with the amount of turbulence in markets" beset by a worldwide credit crisis, said Muhlhauser.

Celestica's (TSX: CLS) operating margins in the first quarter were 2.7 per cent up from 1.7 per cent in the same quarter in 2007, Paul Nicoletti, the company's CFO, said during the interview.

That's "versus our goals of short term operating margins of three per cent to 3.5 per cent," he said. "That's where we are targeting to achieve for the second half of the year."

Muhlhauser predicted that "as a result of ... the implementation of our lean operating system you will continue to see our operating margins improve as we go through the year."

On Wednesday, the global provider of electronics manufacturing services, reporting in U.S. dollars, reported net income of US$28.9 million, up from a year-earlier loss of $34.3 million.

Net earnings of 13 cents per share compared with a year-ago loss of 15 cents per share, as quarterly restructuring costs abated to $3.3 million from $8 million.

Revenue for the January-March period was flat at $1.84 billion.

Earnings per share adjusted for non-operating items came to 15 cents, handily outpacing the Thomson Financial analyst consensus expectation of eight cents.

Looking ahead, said Muhlhauser "given the number of new programs and the current book of business that we have, we see revenue continuing to grow throughout the year, operating margins continuing to improve and the working capital performance of the company continuing to improve."

"We see an excellent year ahead," he said. "With our strong financial position ... we feel Celestica is well positioned for continued progress in 2008 and beyond."

"We're a global company, so we enjoy the opportunity and the benefit of serving a global group of customers."

Second-quarter revenue is forecast at $1.8 billion to $2 billion, with adjusted net earnings per share between 13 and 19 cents.

On the TSX, Celestica shares were up $1.75, or 26.32 per cent, at $8.40 in early afternoon trading.

ADVERTISEMENT

Iconocast is about learning and teaching without borders; we offer eMarketing, Internet Advertising, Internet Marketing, Search Engine Optimization, Search Engine Marketing, Online Branding, and eMarketing News Services.

Live help by AliveChat

Iconocast Home Page

Contact Iconocast

Iconocast Health Articles

© 2003-07. ICONOCAST is a trademark of iconocast.com.