TE Connectivity exceeded Wall Street’s quarterly earnings projections on Wednesday, though the Ireland-based technology company cautioned that ongoing Middle East conflicts could force them to increase customer prices due to rising material costs.
The company’s stock price dropped more than 5.4% during premarket trading following the announcement.
CEO Terrence Curtin explained in a Reuters interview that the conflict in Iran has created additional expenses for shipping, freight transportation, and oil-derived materials like resins.
“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 stated.
The Middle East war has disrupted oil and petrochemical supply chains, leading to increased costs for plastics and polymers. This has forced various companies to implement pricing adjustments and operational changes to maintain profitability.
TE Connectivity’s industrial solutions division, which produces electrical connectors and components for factory automation and data center equipment, experienced remarkable growth with sales jumping 27% compared to the same period last year.
According to Curtin, this industrial segment expansion resulted from increased demand for artificial intelligence technologies and energy infrastructure, particularly electrical grids supporting power-intensive data centers.
The company’s transportation solutions division, manufacturing vehicle terminals, connectors, and sensors, recorded a 4.7% year-over-year sales increase during the second quarter.
For the upcoming quarter, TE Connectivity projects adjusted earnings of $2.83 per share, surpassing analyst predictions of $2.80 per share based on LSEG data.
The quarter ending March 27 generated $4.74 billion in revenue, slightly below the anticipated $4.76 billion.
The company reported second-quarter adjusted earnings of $2.73 per share, exceeding analyst estimates of $2.70.
