TE Connectivity Ltd. (Formerly Tyco Electronics Ltd.) Business Report FY ended Sep. 2016
Financial Overview |
(in million USD) |
| FY ended Sep. 30, 2016 | FY ended Sep. 25, 2015 | Rate of change (%) |
Factors | |
| Overall | ||||
| Net Sales | 12,238 | 12,233 | 0.0 | 1) |
| Operating Income | 1,902 | 1,749 | 8.7 | - |
| Transportation Solutions Segment | ||||
| Net Sales | 6,503 | 6,351 | 2.4 | 2) |
| Operating Income | 1,191 | 1,193 | (0.2) | - |
Factors
1) Overall Net Sales
-The Company's net sales were flat in FY ended September 30, 2016 as compared to FY 2015, as increased net sales in the Transportation Solutions and Industrial Solutions segments were offset by declines in the Communications Solutions segment. Foreign currency exchange rates negatively impacted net sales by USD 254 million. On an organic basis, net sales increased 1.5%.
2) Transportation Solutions Net Sales
-Net sales in the Transportation Solutions segment increased 2.4% to USD 6,503 million in FY 2016 from FY 2015 due primarily to organic net sales growth of 4.9%, partially offset by the negative impact of foreign currency translation of 2.7%. FY 2016 included an additional week which contributed USD 130 million in net sales.
-The organic net sales for Automotive market increased 5.6% in FY 2016 with growth of 8.4% in the Asia–Pacific region and 5.9% in the EMEA region, partially offset by a decrease of 0.9% in the Americas region. In the Asia–Pacific region, the growth was driven by increased electronification and market share gains in China. In the EMEA region, sales increased due to electronification and new model launches. The Americas region was adversely impacted by market weakness in North America and macroeconomic conditions in South America.
Acquisitions
-During FY 2016, the Company acquired four businesses, including Jaquet Technology Group, a manufacturer of speed sensors, for a combined cash purchase price of USD 1.3 billion, net of cash acquired. (From FY 2016 annual report and a press release on May 20, 2016)
Divestitures
-In March 2016, Littelfuse, Inc. announced that it has completed its acquisition of the circuit protection business of TE Connectivity Ltd. for USD 350 million in cash. The circuit protection business has a leading position in polymer-based resettable circuit protection devices, with a strong global presence in the automotive, battery, industrial, communications and mobile computing markets. The acquired business has operations in Menlo Park, California, USA and manufacturing facilities in Tsukuba, Japan and Shanghai and Kunshan, China. Littelfuse will continue to produce and sell PolySwitch devices, 2Pro devices, PolyZen devices and other circuit protection products that are part of the acquisition. (From a press release on March 25, 2016)
Outlook for FY ending Sep. 2017
-For FY 2017, the Company expects net sales to be between USD 12.3 billion and USD 12.9 billion, an increase from USD 12.2 billion in fiscal 2016, reflecting sales growth in the Industrial Solutions and Transportation Solutions segments, partially offset by sales declines in the Communications Solutions segment.
-During FY 2017, the Company expects net sales increase in the automotive end market to outpace expected growth in global automotive production of approximately 1% as a result of increased content per vehicle and market share gains. Also, the Company expects net sales to increase in the commercial transportation and sensors end markets.
R&D Expenditure |
(in million USD) |
| FY ended Sep. 30, 2016 | FY ended Sep. 25, 2015 | FY ended Sep. 26, 2014 | |
| Overall | 566 | 540 | 484 |
| -Transportation Solutions | 312 | 262 | 196 |
R&D Structure
-The Company has more than 7,000 engineers working in product research, development, and engineering.
-In FY 2016, the Company derived approximately 20% of its net sales from new products, including product extensions, introduced within the previous three fiscal years.
Capital Expenditure |
(in million USD) |
| FY ended Sep. 30, 2016 | FY ended Sep. 25, 2015 | FY ended Sep. 26, 2014 | |
| Overall | 628 | 600 | 635 |
| -Transportation Solutions | 429 | 400 | 379 |
Investment Outside Switzerland
-The Company's China auto business has started the second phase of its NEPZ Plant expansion project in Suzhou. Approximately USD 100 million is expected to be invested in this project, and new operations are scheduled to begin in 2017. The plant will have a floor area of 45,000 square meters, and will produce connectors, wire harnesses, junction boxes, and sensors for new energy vehicles. The Company’s EPZ Plant in Suzhou is also planning the third phase of its expansion project, which will increase the plant’s floor area to 36,500 square meters. Its new operations are expected to begin in 2017 as well. (From news releases issued by multiple sources on January 10, 2017)