Jabil’s quarterly profit beats estimates as cost cutting measures takeoff

(Reuters) -Jabil reported core quarterly profit slightly above Wall Street estimates on Thursday, as the electronic components maker turned its focus on cutting costs to navigate weak demand in a tough economy.

Shares of the St. Petersburg, Florida-based company rose 5.3% in early morning trade.

The company said in October it plans to reduce its workforce across selling, general and administrative cost bases.

Jabil on Thursday said its second-quarter operating income is likely to see an impact of between $75 million and $100 million impact due to restructuring, severance and related charges.

On an adjusted basis, the company earned $2.60 per share in the quarter ended Nov.30, compared with estimates of $2.58 per share, according to LSEG data.

“We experienced a broad-based softening in demand during the final stretch of our first quarter,” said CEO Kenny Wilson.

“Despite softer demand, the team delivered good year-over-year growth in core margins and core earnings per share,” he added.

First-quarter revenue of $8.4 billion was also largely in-line with estimates of $8.35 billion.

The company’s consumer, digital print, retail and point-on-sale markets have been facing a supply glut as end-demand remains weak. As a result, customers are delaying or trimming fresh orders, hurting Jabil, which counts Apple as its largest customer. However, Jabil in September said it expects growth in sectors such as clean energy infrastructure and artificial intelligence data centers. Global transition to EVs is also expected to drive over 20% growth in automotive and transport segment revenue in fiscal 2024.

The company’s second-quarter revenue and core profit forecasts were also largely in line with analysts’ expectations.

Jabil joins the S&P 500 index on Dec. 18 after markets open.

(Reporting by Priyanka G; Editing by Shailesh Kuber)