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
TE misses quarterly revenue estimates, flags price hikes due to Iran war
TE Connectivity’s Financial Performance and Impact of Middle East Conflict
By Anshuman Tripathy
April 22 (Reuters) - Electronic equipment maker TE Connectivity missed quarterly Wall Street expectations on Wednesday and warned it may have to pass higher raw-material costs on to customers if conflict in the Middle East continues to disrupt supply chains.
Market Reaction and Company Overview
Shares of the Galway, Ireland-based company, which makes electrical connector systems for data centers and sensors used in vehicles, fell more than 10% in morning trade.
Cost Pressures Following Iran War
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.
Industry Response to Rising Material Prices
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.
Quarterly Results and Outlook
Revenue for the second quarter came in at $4.74 billion, just short of estimates of $4.76 billion.
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.
It reported adjusted profit of $2.73 per share for the quarter ended March 27, beating estimates of $2.70.
Segment Performance and Analyst Commentary
Second-quarter sales in the industrial solutions segment surged 27% year-over-year, driven by demand for AI tools and energy infrastructure such as grids, especially for power-hungry data centers, Curtin said.
"Despite the better aggregate outlook, we expect investors to express concerns on the slowdown in digital data networks growth, potentially driving weakness in the shares," analysts at J.P.Morgan said.
(Reporting by Anshuman Tripathy in Bengaluru; Editing by Tasim Zahid)
