April 26 (Reuters) - TE Connectivity Ltd, a Switzerland-based manufacturer of electronics and sensors, reported a higher-than-expected increase in second-quarter revenue, driven by demand in China, Japan and South Korea.
The company, which makes products including wheel speed sensors, USB connectors, and guidewires for medical procedures, also raised its full-year sales and profit forecast for the second time.
TE Connectivity said a rise in automobile production and an increase in electrification of vehicles in China were among the main drivers of its sales growth in the quarter.
But vehicle sales in China are expected to slow this year as a tax cut on small-engine cars is reduced.
However, that would be more than offset by the growth in TE’s industrial solutions and communications solutions businesses, Chief Executive Terrence Curtin told Reuters.
“Our trends, outside of auto in China, for the rest of the year continue to remain strong based on the order patterns that we are seeing,” Curtin said.
TE Connectivity is seeing a return in demand for its applications that are used in factory automation in China, Curtin said.
The company is also seeing an improvement in demand for its products that serve the home appliances and telecommunications infrastructure sectors in China.
Total orders, on an organic basis, rose 20 percent to $3.4 billion in the quarter ended March 31, the company said.
TE Connectivity’s net sales rose about 9 percent to $3.23 billion in the quarter, and it earned $1.19 per share on an adjusted basis.
Analysts on average were expecting quarterly revenue of $3.09 billion, and earnings of $1.08 per share, according to Thomson Reuters I/B/E/S.
About 32 percent of TE’s 2016 sales were from the Asia-Pacific region, with China alone contributing about 20 percent.
TE’s transportation solutions business accounted for a little more than half of total sales last year, with a roughly equal contribution from its industrial solutions and communications solutions businesses.
TE said it expects organic growth in all its three businesses in fiscal 2017 and raised its forecasts for the period.
The company raised its net sales forecast to $12.6-$12.8 billion from $12.2-$12.6 billion, and adjusted profit forecast to $4.58-$4.66 per share from $4.30-$4.50.
Analysts on average were expecting full-year revenue of $12.51 billion, and profit of $4.43 per share. (Reporting by Ankit Ajmera, Rachit Vats and Laharee Chatterjee in Bengaluru; Editing by Savio D‘Souza)