Jabil CEO Doubts ‘Normal Conditions’ Return Before 2023
It’s hard for contract manufacturer Jabil to answer questions about "when does the fever break” on the tech industry’s global supply chain woes, said CEO Mark Mondello on a call Wednesday for fiscal Q4 ended Aug. 31. “Does the demand…
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start to soften a bit?” said Mondello. “Does the supply start to strengthen a bit? There’s a significant amount of variables there.” Previously unforeseen “incremental tightness” in the supply chain during July and August caused Jabil to finish its Q4 with net revenue of $7.4 billion, below the midrange of the guidance it published June 17. The stock fell 6.2% Wednesday to close at $57.23. For fiscal 2022's first half ending Feb. 28, “we’re going to still see tightness about equivalent to what we saw” in the last two months of Q4 -- “very tight supply in components,” the CEO said. Leveraging the scale of the 400 customers Jabil serves, including Apple, Dish Network, Philips and Sony, plus “just the amount of overall parts we buy," Mondello and his team think “things will start to maybe move in a better direction as we get into the back half” of FY 2022 ending in August, he said. “We’re by no means suggesting that the supply chain is back to normalized levels by the back half of the year.” But if demand trends hold, “and we’re working through this solely on the supply side, then I would think we don’t see normal conditions in the supply chain” until FY 2023's first half ending February 2023, “the way things sit today,” he said.