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Jabil expects strong growth as Covid impact lessens

Margie Manning

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Construction work underway at Jabil's new headquarters, August 2020

Jabil, the largest company headquartered in St. Petersburg, ended its fiscal year with better-than-expected revenue, and sees positive momentum as it heads into FY 2021.

In addition to financial factors such as higher-than-expected sales, improved productivity and lower costs, the manufacturing services company benefits from its focus on diversity and inclusion, sustainability, and environmental, social and corporate governance, said Mark Mondello, CEO.

Jabil (NSYE: JBL) had $27.3 billion in net revenue for fiscal year 2020, which ended Aug. 31, an increase of 7.8 percent from the previous year. The company reported $53.9 million in net income, or 35 cents a share, for FY 2020, compared to $287.1 million in net income, or $1.81 a share, in the prior fiscal year. Net income includes the cost of restructuring, severance and other one-time charges.

Like many companies, Jabil felt the impact of Covid-19 shutdowns, but the company ended FY 2020 strong, with $7.3 billion in net revenue, said Mike Dastoor, chief financial officer.

Michael Dastoor, CFO, Jabil

“During the quarter we experienced fewer Covid-related disruptions than we anticipated in June, which resulted in higher than expected throughput in our plants, a more efficient supply chain and lower Covid-related expenses,” Dastoor said.

Covid expenses were about $25 million lower during Q4 2020 than the company expected in June, and demand was high for several types of products Jabil produces such as mobile devices, 5G and wireless technology, and cloud markets, Dastoor said.

Jabil’s approach to business is broad, Mondello said, as he used an investor update with analysts on Thursday morning to talk about the company’s approach to social issues.

“Jabil is a service business and we know each employee is critical to our success. Each employee has the right to be treated with dignity and respect. We operate  in 30-plus countries, employing people who don’t look the same, don’t talk the same, that practice different religions, have different sexual orientations, people with different physical limitations and neuro diversities,” Mondello said. “Diversity and inclusion is top of mind as we employ folks all around the world, but we’ve got more work to do. We won’t abide racism or lack of human rights. We won’t accept discrimination or social injustice.”

Mark Mondello, Jabil CEO

The company has formed a nine-person council to help guide internal diversity and inclusion efforts. Jabil also is a premium sponsor for the upcoming Special Olympics U.S. games, a partnership that will give employees a chance to engage with the athletes and coaches.

Mondello also focused on environmental, social and corporate governance and sustainability goals. The company is expanding its use of clean energy and wants to reduce its greenhouse gas emissions by 25 percent within five to six years. It is also aligned with the United Nations’ sustainability development work.

“We’re determined to lead our industry by attaining the highest standards in the area of employee safety, water usage, hazardous waste and supply chain management,” Mondello said.

The outlook for FY 2021 is positive, Mondello said. For the first quarter of FY 2021, Jabil expects net revenue of $6.7 billion to $7.3 billion, operating income of $238 million to $283 million, and earnings per share between 79 cents to $1.02.

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