01—Abstract
Summary
Summary of the 20-F filed March 22, 2012. Cited figures are marked; the original filing is the authoritative source.
Celestica Inc. reported significant growth in its 2011 fiscal year, with revenue increasing by 11% to $7.2 billiona.
This growth was driven by new program wins and strategic acquisitions, particularly in the diversified end market, which saw a 40% increase in revenue. The company's net earnings also saw a substantial rise, more than doubling from $101.2 million in 2010 to $195.1 millionb in 2011, aided by improved operating performance and lower restructuring charges. Despite the positive financial results, investors should be aware of key risks.
Celestica remains heavily reliant on a small number of major customers, with its top 10 customers accounting for 71%c of revenue in 2011, and a significant portion of revenue coming from Research In Motion (RIM). The company also faces intense competition and pricing pressures within the electronics manufacturing services (EMS) industry, and operates within an uncertain global economic environment. Management is actively pursuing diversification into new markets and acquisitions to mitigate customer concentration risks.
02—Key points
Key Highlights
- Revenue increased by 11% year-over-year to $7.2 billion in 2011.
- Net earnings more than doubled from $101.2 million in 2010 to $195.1 million in 2011.
- Diversified end markets showed strong growth, with revenue up 40% year-over-year.
- The company's reliance on top customers remains high, with the top 10 customers representing 71% of 2011 revenue.
- Research In Motion (RIM) accounted for 19% of 2011 revenue.
- Celestica faces significant competition and pricing pressures in the EMS industry.
- The company is actively pursuing acquisitions and expanding into new markets to diversify its customer and revenue base.
03—Questions
Frequently Asked Questions
What was Celestica's financial performance in 2011 compared to 2010?
In 2011, Celestica reported an 11% increase in revenue to $7.2 billion and a significant improvement in net earnings, which more than doubled from $101.2 million in 2010 to $195.1 million in 2011. This growth was driven by new program wins, acquisitions, and expansion into diversified markets.
What are the primary risks facing Celestica?
Celestica's key risks include its significant dependence on a limited number of major customers, with the top 10 customers accounting for 71% of revenue in 2011. The company also operates in a highly competitive EMS industry characterized by aggressive pricing, and faces challenges related to economic uncertainty, fluctuating commodity and labor costs, and potential disruptions in its global operations.
How is Celestica addressing its customer concentration risk?
Celestica is actively working to reduce its reliance on a few large customers by targeting new customers and services in its traditional markets, as well as expanding its business in diversified markets such as industrial, aerospace and defense, healthcare, green technology, and semiconductor capital equipment. The company also continues to pursue strategic acquisition opportunities to further diversify its revenue and customer base.
What was the impact of acquisitions on Celestica's business in 2011?
In 2011, Celestica acquired the semiconductor equipment contract manufacturing operations of Brooks Automation, Inc., which enhanced its service offerings and expanded its customer base, particularly in the complex mechanical semiconductor space. Acquisitions also contributed to the significant revenue growth in the diversified end market.
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