Now what: Jabil's surprising growth rested mainly on its diversified manufacturing services, or DMS, as that division delivered 47% higher sales. DMS now represents 41% of Jabil's total sales, and is likely to pass the electronics manufacturing segment's sales during the coming year. In the first quarter, management guided to 33% DMS sales growth and flat EMS revenues year over year.
The two divisions currently produce roughly equal amounts of core profits, as DMS operations run at a significantly higher operating margin.
For those not familiar with Jabil's recently revamped reporting structure, EMS is kind of the industrial heavy lifting side of the company, selling large-scale electronics manufacturing services to a wide variety of customers. DMS focuses more directly on consumer markets such as mobility and healthcare, where Jabil finds many high-growth opportunities for its engineering and material science services.
Jabil is often seen as a proxy for Apple 's device production volumes as that company represented 24% of Jabil's overall sales in 2015, up from 18% in 2014, and is the only Jabil customer breaking the 10% reporting threshold in the just-completed fiscal year. The company doesn't like to break out how any particular client's orders fall into Jabil's two reporting segments, but it's probably fair to say that most of Apple's orders would count toward that rapidly growing DMS segment.
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The article Why Jabil Circuit, Inc. Jumped 18% Friday Morning originally appeared on Fool.com.
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