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SINGAPORE — Flextronics released the results of its fourth quarter and fiscal year, ending March 31, 2006, noting focused efforts on potential growth opportunities in its core EMS business.
Net sales from continuing operations amounted to $3.5 billion in the fourth quarters ending March 31, 2006 amd 2005. Exclusing net sales of the divested Network Services Division of $207 million in the fourth quarter ending March 31, 2005, net sales from continuing operations grew 6% year-over-year in the fourth quarter ending March 31, 2006.
For the year ending March 31, 2006, net sales from continuing operations were $15.3 billion, compared to $15.7 billion in 2005. Excluding the net sales from the divested Network Services division of $275 million and $766 million in the years ending March 31, 2006 and 2005, net sales from continuing operations amounted to $15.0 billion.
Fourth-quarter net income increased 3% to $98 million, compared to $98 million during the fourth quarter last year. Flextronics' generally accepted accounting principles (GAAP) net income was $43 million in the fourth quarter ending March 31, 2006, compared to $74 million during this quarter last year. This resulted in GAAP net income of $141 million in the year ending March 31, 2006, compared to $340 million in year-end March 31, 2005.
During its current fiscal year, Flextronics noted that it increased its cash and certificates of deposit by $129 million to $1 billion. The company also reduced its current debt $270 million to $596 million, and generated cash flow of $591 million from operations.
Revenues within the American market rose from 21–24% for this period, while Asia dipped slightly from 59–56% and Europe was unchanged at 20%. With regard to market segments, handheld devices fell from 30–26% and computers and office automation dipped from 24–22%, due to normal seasonal trends, said said Mike McNamara, chief executive officer (CEO), Flextronics. Markets such as industrial, automotive, medical, and other; communications infrastructure; and IT infrastructure experienced slight gains. The consumer market was unchanged at 10%.
Flextronics plans to invest in design and vertical engineering capabilities, expecting original design manufacturer (ODM) sectors to triple module shipments, added McNamara, who also highlighted a significant amount of opportunity in the EMS sector for high-volume/low-margin applications. "Fiscal 2006 was a very strong year in terms of new business wins from both new and existing customers," he said. "We think this should start showing up in our revenue growth rates in the second half of calendar 2006." The company also plans to ramp up investments in head count, equipment, and factory expansions throughout the next fiscal year.