Flex, Jabil Credit Ratings at Risk if Tariffs Rise, S&P Says
S&P Global Ratings is “fairly confident” that tech manufacturers Flex and Jabil “could manage their metrics to preserve” their current BBB-minus credit ratings if the fourth tranche of U.S. tariffs stays at 15 percent. At 30 percent, as the first…
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three tariff rounds are scheduled to rise to on Oct. 15, potential EBITDA declines “could prove to be too severe” for either company to avoid a downgrade, said S&P Friday. It estimates goods generating 6-9 percent of Flex's revenue and 12-17 percent of Jabil's sales will have exposure to the four rounds. Jabil’s largest customer, Apple, draws 37 percent of its revenue from U.S. sales, it said. For Flex, the largest customer is Ford, which gets 61 percent of revenue from the U.S., it said. In fiscal 2019 ending March 31, 25 percent of Flex revenue came from manufacturing operations in China, the ratings firm said. It estimates Jabil derives 40-50 percent of revenue from Chinese production. The companies didn’t comment Monday.