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The Massachusetts-based firm, which has 500 employees in Athlone and Galway, said that net income amounted to USD238,000, or a penny per share, a major turnaround from last year's net loss of USD7.2 million, or USD0.23 a share in the same period. The company's cash earnings, which excluded special charges, gains, and other exceptional items, increased by a penny year-on-year to USD0.12 a share.
The improved figures were in part due to serious cuts in selling, general and administrative expenses, which fell to USD14.9 million from USD31.7 million a year earlier. Interest expenses also improved to USD2.1 million from USD5.8 million.
Still, the firm's revenue fell to USD228 million from USD403 million a year ago, "reflecting continued softness in end markets and changes in customer mix," MSL said. Importantly, the firm said that after refinancing its credit facilities a few weeks ago, it ended the quarter with cash balances exceeding all outstanding debt.
Looking ahead to the end of the current quarter, MSL forecast a per share Q3 cash loss of between USD0.01 and USD0.03 on revenue of USD220 million to USD240 million. The business went on say that it planned to take a third quarter charge of USD8 million to USD10 million to reduce excess capacity in "higher-cost geographies" while expanding in lower-cost locations.
At this point it is unclear what areas are considered "higher-cost geographies" or whether Irish jobs are at risk. MSL's Irish facility currently makes medium-high mix printed circuit board and systems assembly for original equipment manufacturers (OEMs).
Additionally, the company has manufacturing facilities in Minnesota, Illinois, Massachusetts, North Carolina, Spain, Singapore, Malaysia and China employing almost 3,500 people. MSL is also in the process of acquiring Lexmark International Inc.'s electronics business unit in Reynosa, Mexico for an undisclosed sum.
"Our solid performance in the second quarter and the momentum in our sales pipeline show that our sharpened focus on key markets and customers led by a strong management team is increasing MSL's competitive position," said Bob Bradshaw, MSL's chief executive officer and president. "I am confident we will continue that momentum to increase our revenue and earnings growth as the end markets pick-up."
The USD100-billion-a-year contract electronics manufacturing business receives most of its revenues from the production of high-volume, low-margin products like mobile phones, networking products and video game systems. And in the past 10 years employment in this sector has skyrocketed as low-cost manufacturing centres sprang up in Asia and in Europe.
But more recently, the telecoms and high-tech slump has taken its toll on the industry, forcing giants in the business to slash jobs and in some cases close facilities, especially in relatively high-cost areas. Ireland has taken its share of the burden in this regards, as firms like Celestica, Solectron, Sanmina-SCI and Flextronics have all cut back their operations here resulting in the loss of hundreds of jobs throughout the country. MSL itself cut more than two dozen Irish jobs earlier this year.
Still, there have been recent bright spots for the industry of late, most notably Goldman Sachs' decision to give Flextronics, Celestica, Sanmina-SCI and Solectron "Market Performer" ratings, boosting their share price and injecting more confidence into the industry.
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