Last fall’s devastating floods in Thailand cost electronics manufacturer Flextronics $100 million in lost revenue in the past quarter and the company expects to lose a similar amount in the current quarter.
Flextronics officials said they are stilling feeling the impact of the floods, which hit factories in Thailand and reverberated across Asia-based supply chains.
That was one reason Flextronics, one of the world’s largest providers of outsourced electronics manufacturing, saw its net profit fall back nearly a third in the quarter ending Dec. 31, 2011, to $102.2 million.
The company is also coping with lean inventory strategies among customers that Flextronics officials believe will remain a part of the business for the foreseeable future.
“We still don¹t expect a major correction on the horizon, but it’s fair to say that in the near term the technology supply chain will continue to face uncertainty and certain pockets of demand softness,” CEO Mike McNamara told investment analysts in a conference call on release of the company’s earnings this week.
Flextronics cut its own inventories 7 percent in the December quarter, or by $272 million. That was a bit deeper than the 3.4 percent drop in the company’s gross sales and Chief Financial Officer Paul Read said other supply chain measures suffered as Flextronics managed its withdrawal from original-design manufacturing operations.
“Our inventory turns decreased to 7.6 turns from 8.1 turns, which equates to an increase in inventory days of three days,” Read said. “Our inventory turns metric was negatively impacted by the elimination of the high-asset velocity ODM PC business, which had carried inventory turns in excess of 30 turns.”