By Anshuman Tripathy
April 22 (Reuters) – TE Connectivity projected third-quarter profit above Wall Street expectations on Wednesday, but warned it may have to pass higher raw-material costs on to customers if conflict in the Middle East continued to disrupt supply chains.
Shares of the Galway, Ireland-based company fell more than 5.4% in premarket trade.
The warning came as higher costs for transportation, including freight rates, and oil-based products such as resins added pressure after the Iran war, Chief Executive Terrence Curtin told Reuters in an interview.
“We will have to see how long these impacts last, hopefully not long, and in that regard, (we will) have to pass on pricing to protect our margin,” Curtin said.
Rising prices for plastics and polymers, driven by disruptions to oil and petrochemical flows linked to the war in the Middle East, have prompted some companies to adopt mitigation strategies around pricing and other operations.
Second-quarter sales in the company’s industrial solutions segment, which makes electrical connector systems and components for factory automation and equipment used in data centers, surged 27% year-over-year.
Curtin said growth in the industrial segment was driven by demand for AI tools and energy infrastructure such as grids, especially for power-hungry data centers.
The firm posted a 4.7% year-over-year rise in net sales for the second quarter at its transportation solutions segment, which makes terminals, connector systems, and sensors used in vehicles.
The company forecast an adjusted profit of $2.83 per share for the current quarter, compared with analysts’ expectations of $2.80 per share, according to data compiled by LSEG.
Revenue for the quarter ended March 27 came in at $4.74 billion, compared with estimates of $4.76 billion.
TE Connectivity reported adjusted profit of $2.73 per share for the second quarter, beating estimates of $2.70.
(Reporting by Anshuman Tripathy in Bengaluru; Editing by Tasim Zahid)
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