2010 Outlook:
1Q10 Sales Performance and Forecast

By Ronald E. Bishop, Bishop & Associates Inc.

The industry shipped $10,264 million in the first quarter of 2010, up 39.4 percent over the first quarter of 2009. Sequentially, 1Q10 was up 3.9 percent over 4Q09.

The following table shows industry sales performance by quarter since 1Q07.

Connector Industry

Sales By Quarter

You will notice that 1Q10 sales of $10,264 million are equivalent to industry sales in 1Q07. In a typical/normal business environment, quarters two, three, and four will achieve sequential growth, with the fourth quarter having higher sales than the three previous quarters.

However, we do not believe this is a normal business environment. Business is certainly getting better, but there are still serious problems facing the world economy, such as high unemployment, housing difficulties, and heavy debt loads of many Western countries, etc.

As a result, we are projecting 2010 sales of only $40,650 million, an 18.2 percent growth over 2009, but still below the sales results achieved in 2007. This is how we believe the industry will perform, by quarter, for the remainder of 2010.

2010 Forecast By Quarter

2010 Forecast by Region
It is our belief that demand in the second and third quarters of 2010 will soften, still resulting in year-over-year growth because of easy comparisons to 2009, yet showing a decline sequentially: 5.0 percent in 2Q10 and 1.0 percent in 3Q10.

The following table provides our 2010 forecast by region.
 

2010 Forecast By Region

Sales are currently up 39.4 percent through 1Q10, but we believe demand will soften modestly in the second and third quarters, before picking up again in the fourth quarter. This, combined with tougher comparisons, will drop full-year growth to 18.2 percent for the full-year 2010.

Industry Sales By Year
$ in millions

2010 Forecast by Market Sector
All market sectors are achieving growth. The fastest-growing sectors, on a year-over-year basis, are automotive and industrial. These areas performed the worst in 2009 and have the easiest comparisons.

Some companies have reported automotive sales up over 200 percent in 1Q10. Tyco Electronics achieved year-over-year growth in automotive of 78 percent; Molex reported 73 percent, and Amphenol 64 percent. This market is recovering, but the large growth numbers are a function of easy comparisons.

The same applies to the recovering industrial market sector. On a year-over-year basis, Tyco Electronics was up 29 percent in 1Q10, Molex was up 50 percent, and Amphenol was up 17 percent.

The following table provides our 2010 forecast by market sector.

World Connector Market Forecast
By Equipment Sector
 

As you will notice, we believe computer and telecom will outperform the other market sectors in 2010, up 25.2 percent and 21.4 percent, respectively.

As the year progresses, automotive and industrial will flatten out, but will still achieve year-over-year growth of 13 percent and 15.2 percent, respectively.

1Q10 Performance: Tyco Electronics, Amphenol, and Molex
The consolidated sales of the three largest connector companies were up 43.5 percent. Sequentially, sales were up 3.3 percent.

The following table provides first quarter 2010 sales results of the Big 3, compared to the industry.

Big 3 Sales Performance vs. The Industry
 

The following chart compares each company’s quarterly sales to the industry since 1Q07.

Year-Over-Year Quarterly Change in Sales

The following shows how these three companies performed by market sector. All markets are achieving growth. 

Big 3 Sales Performance

By Market Sector

 The automotive, industrial, and consumer markets have all had strong interconnect demand. These were the worst performing markets in 2009 and have the easiest comparisons.

If you would like to subscribe to the Connector Industry Forecast, go to connectorindustry.com and select “Research Reports.” You may also contact us at bishop@bishopinc.com, or by calling 630.443.2702.