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.
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.
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.
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.
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)
