Apple supplier Jabil withdrew its full-year guidance Monday, after the “rapidly changing” coronavirus spread made its projections of growth for the year appear wildly unrealistic.
Jabil, which provides integrated circuit components for the iPhone, had hoped to increase its core earnings by 21% and revenue by 6% this year. Instead, in the last quarter it missed its earnings estimates by $60 million.
Revenue rose slightly to $6.13 billion annually. However, it didn’t increase by close to the amount that the company had projected. On a GAAP (generally accepted accounting principles) basis, Jabil recorded a net loss of $3.3 million. During the same quarter last year, it recorded a profit of $67.4 million.
Jabil claimed that the coronavirus impact had increased its operating expenses by a massive $53 million during the quarter.
During the Q2 earnings call, CEO Mark Mondello said the company — which relies on Apple for approximately 22% of its earnings — got of to a “nice start” before the coronavirus crisis broke out.
The company’s plant utilization was then “greatly diminished” by efforts to contain the virus. At their worst, plant utilization fell to 45-50% in February. At present, it has returned to 80%, possibly suggesting the worst is over.
Jabil is just the latest supplier to be hit by coronavirus
Jabil is just the latest Apple supplier to report problems relating to the novel coronavirus, COVID-19, which is currently sweeping the world. Foxconn, Apple’s biggest supplier, has said that it expects its full-year 2020 revenue to be affected by the outbreak. That is despite regular production having reportedly resumed at its plants.
Apple has also been negatively affected. Last month, it pulled its forecast for fiscal second quarter earnings as a result of coronavirus. This is only the second time in 15 years that it has done this. The impact is likely to be felt by Apple throughout 2020. According to recent reports, Apple’s first 5G iPhones could be delayed by the production challenges. This is likely to hit Apple’s pocket during the all-important holiday quarter.
Via: Motley Fool
