Apple shrinks, Amazon grows among Jabil’s largest customers

Apple is taking a smaller slice of Jabil’s revenue pie, while Amazon is loading up its plate.

The tech giants are the two largest customers at Jabil, a manufacturing services firm. Combined they accounted for 31 percent of Jabil’s $27.3 billion in net revenue in fiscal year 2020, which ended Aug. 31, Jabil said in its just-filed annual report.

The report also showed continued growth in employees and manufacturing space for Jabil (NYSE: JBL), the largest company headquartered in St. Petersburg.

Related: Jabil gets $530,000 tax break from Pinellas County

Jabil provides manufacturing services to companies in a variety of industries, including automotive, computing and storage, consumer electronics, healthcare, industrial, networking and telecommunications, and packaging. One of its best known customers is Apple (Nasdaq: AAPL). Jabil makes components for Apple’s iPhones and other Apple devices.

Public companies are required to tell investors the names of their largest customers, and Apple has consistently shown up in Jabil’s list for about a decade. Three years ago, in fiscal year 2018, Apple accounted for 28 percent of Jabil’s net revenue, heightening concerns among analysts and other observers that Jabil was too reliant on a single customer. Jabil has made product diversification a key part of its strategy, and that’s showing up in the numbers. Apple’s revenue share fell to 22 percent in FY 2019 and dropped still further to 20 percent of net revenue in just-ended FY 2020.

“Jabil’s single customer concentration is high relative to peers, but this exposure is diversified across numerous products,” Moody’s Investors Service wrote in an Aug. 31 report. “Although Jabil’s revenue concentration with Apple Inc. remains a concern, Moody’s expects Jabil will continue to target limiting exposure to a single product/product set to no more than 5 percent of annual operating cash flow.”

Meanwhile, Amazon (Nasdaq: AMZN) has become an increasingly important customer for Jabil, responsible for 11 percent of net revenue in FY 2020.  Jabil did not say what Amazon bought, but Amazon provides web services that likely rely on the computing and networking products Jabil makes.

Other large Jabil customers are Cisco Systems, Hewlett-Packard, Ingenico Group, Johnson and Johnson, LM Ericsson Telephone Company, NetApp, SolarEdge Technologies and Tesla, but none of them account for more than 10 percent of Jabil’s net revenue.

Jabil’s manufacturing operations primarily are in the Americas, Europe and Asia. As of Aug. 31, the company had 53.86 million square feet of owned or leased facilities, about 2 percent more than a year ago.

Jabil employed 240,000 people worldwide as of Aug. 31, 2020, compared to 200,000 people on the same day a year earlier.

However, Jabil has been reducing headcount because of the Covid-19 pandemic, the annual report said. In FY 2020, Jabil incurred approximately $141.9 million in direct costs associated with the Covid-19 outbreak, the report said.