Flextronics sees double digit growth this yr
* Expects double-digit revenue growth for rest of 2010
* PC unit sales to double to $2 bln this year
* To add 20,000 workers in China, has 200,000 worldwide now
(Adds details and quotes)
By James Pomfret
SHENZHEN, China, Aug 26 (Reuters) - Global contract manufacturer Flextronics (FLEX.O) sees continued double-digit revenue growth in the last two quarters this year, its chief executive said on Thursday, bolstered by strong PC sales.
A key supplier to top tech brands such as Hewlett-Packard (HPQ.N), Flextronics expects revenue from its PC manufacturing unit to double to $2 billion this year and reach $4 billion by the end of 2011, Mike McNamara told Reuters in an interview in the southern Chinese city of Shenzhen.
"We think there's some good positives," he said.
Analysts polled by Thomson Reuters I/B/E/S expect revenue to grow 15 percent to $2.7 billion in the year ending March 2011, before moderating to about 7 percent in the next financial year.
The growth would help Flextronics compete against more established rivals like Quanta (2382.TW), Compal (2324.TW) and Hon Hai (2317.TW), amid continued economic weakness in Western economies and rising wage bills in China. Flextronics' net sales rose 14 percent to $6.57 billion in the first quarter and McNamara said revenues at the mid-point of the second quarter had already hit $7 billion, well within analysts' and its own expectations.
"We think those numbers are going to come through and the PC industry is now growing 100 percent a year so that's three years of 100 percent growth.
"It's not the result of the macro-economy but the result of a new product category that we're penetrating, so sometimes that growth can sit on top of whatever macro-economic effects the market is going to give us," he added.
Its industrial and medical businesses would also contribute strongly, while its clean technology business could bring in $1 billion in incremental revenue in 3-4 years' time.
The Singapore-based global contract manufacturer beat earnings expectations in the first quarter and was bullish on solid demand in technology sectors such as semiconductors.
Components shortages of LCDs and memory chips, which constrained revenues by around $200 million in the last quarter, were now easing, McNamara said.
"Those shortages are reducing significantly right now. We may not even constrain this quarter's output by shortages."
Yet the firm, which runs a string of ten factories in China including a 55,000 worker industrial complex in the coastal Chinese city of Zhuhai, said average wage rises of some 15-20 percent were a concern in China, its key global production base.
"It's definitely a headwind," McNamara said, adding the firm would ultimately have to pass on the extra costs to clients.
The firm has been expanding its manufacturing to inland China where production costs are cheaper and labour more plentiful, including a new 10,000 worker plant in Jiangxi province.
Paul Humphries, executive vice president of human resource management for Flextronics, said it hoped to recruit up to 20,000 new workers in China next year to bolster production of PCs and other products. Half its 200,000 global workforce is in China.
In earlier comments, McNamara said the firm was also considering expanding production elsewhere, such as Mexico and Eastern Europe, but it still views China as a crucial base.
Flextronics reported fiscal first-quarter net earnings of $118 million, or 14 cents per share, compared with a loss of $154 million, or 19 cents per share, in the year-ago quarter.
(Editing by Mark Potter)
((james.pomfret@thomsonreuters.com; +852 2843 6390; Reuters Messaging: james.pomfret.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: FLEXTRONICS/
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