2013 First Quarter Results are Promising
2013 started off with first quarter connector industry revenues of $11,655 million, up +1.2% from the prior year. This was approximately three and one half points lower than Bishop anticipated in January. Bishop had projected 1Q13 to grow +4.9% over 1Q12. After YOY growth of +7% in January, February was down -5.2% and March sales declined -4.1% YOY, resulting in a diminished first quarter performance.
The first quarter performance of the top three companies is as follows:
- Amphenol reported year-over-year sales growth of 10% in 1Q13 with 4% of the growth being organic. Sales were up 42% YOY in mobile devices, double-digit YOY increases in commercial aerospace and broadband, and high single-digit increases in automotive and industrial. Quarter-to-quarter, sales were down 5.8%.
- Molex reported a modest YOY increase of +1.9% in calendar 1Q13, which was down -11.9% sequentially from 4Q12. YOY sales growth was up in the high double digits for mobile devices and medical/military, and low double digits for automotive. Consumer sales were down double digits, and infotech, telecom, and industrial were down in the single digits.
- TE Connectivity reported sales growth of +0.5% in calendar 1Q13, which was up +4.2% sequentially. Organically, sales were down -4% YOY. Sales were up 47% YOY in mil/aero/marine due to the acquisition of Deutsch, and automotive was up single digits. Enterprise networks and industrial were down double digits. Energy, consumer, appliances, data communications, and telecom networks were down single digits YOY.
The combined results of the top three companies are sales of $5,198 million, up 2.6% YOY and down 1% sequentially.
The following table shows the 1Q13 results by region.
Amphenol is projecting YOY sales growth of +5.1% to +7.4% for 2Q13 and +6.7% to +8.5% for the full year of 2013. Molex is projecting calendar 2Q13 to grow +1.3% to +5.9% YOY. TE is projecting calendar 2Q13 sales to change -5.0% to +2.1% YOY and full fiscal year sales to change -1.3% to +1.0%.
Bishop is forecasting +4.2% growth in sales for 2013 to a market value of $49,632 million.
The following points support this:
- Strong automobile sales in North America and China directly drive connector consumption and this is felt in other industries, such as industrial.
- Strong stock market performance in the United States makes consumers more confident in their financial situation and increases their inclination to spend, which drives economic growth.
- Strong housing market sales in the United States and low inventories of existing homes will prompt new construction and increasing connector consumption in appliance and industrial market sectors.
The threats to the forecast are:
- The continuing political and fiscal instability of Europe will keep down consumer spending and automotive production.
- Persistently high unemployment levels in the United States and Europe dampens consumer confidence and disposable income.
- Slowing of the economic growth in China and Asia Pacific holds down consumer and business consumption of goods.
We are still projecting a weak first half of 2013, followed by improving growth in the second half of the year, as shown in the following chart.
The following table shows the anticipated results by region.
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