By Valerie Coffey
At last, many American and European connector manufacturers are finding strength in numbers—sales numbers. Publicly owned companies Amphenol, Molex, Radiall, and ODU have all had glowing financial earnings to report in the past quarter. Sales have set records in some cases, but analysts caution that such record results are unlikely to continue unabated.
Amphenol reported sales of $384.1 million in the third quarter of 2004 versus $314.8 million in the same quarter last year. Year-to-date sales are up 25.5%.
Net income of 3Q04 is up 47.6% over 3Q03. Year-to-date net income, on the other hand, is even better—65.7% greater than the same nine months of 2003.
Amphenol chairman and CEO, Martin Loeffler, contributed part of the success to interconnect products being up 24% in the quarter. Every market saw growth, but wireless and mil/aero were particularly strong. Full year 2004 earnings are forecast to increase (Yes, increase!) 43% to 45% compared to prior guidance of 35% to 40%.
Amphenol predicts 4Q04 sales of $392.5 million, or a sales increase of 14.8% over 4Q03, which would be a new Amphenol record for sales during a quarter. The previous record was $387.1 million achieved in 2Q04. However, according to Bishop & Associates, industry growth rates are slowing down. Amphenol's 4Q04 forecast of 14.8% will be the slowest growth rate since 2Q03, six quarters ago. Additionally, Bishop's industry forecast of 6.3% growth in 4Q04 will break a string of four consecutive quarters of double-digit growth for the industry.
Is this bad news, or just a normal business cycle? Economists agree that growth of 20% is not likely to be sustained over time. Bishop's 2005 outlook is for growth in the 6% to 8% range.
Molex sets record
Molex reported sales were up 28.9% to $640.2 million in calendar 3Q04, breaking the company sales record set in 2Q04 of $631.8 million. Net income of $55.6 million was an increase of a whopping 73.2% over the same period in 2003.
According to analysts, Molex is growing significantly faster than other connector companies. Molex vice-chairman and CEO, Joe King, attributes this fact to aggressive investment in new product R&D and global capital equipment capabilities. Molex forecasts calendar 4Q04 revenue of $635 to $650 million, an increase of 16% to 18% over 4Q03. Molex has achieved year-over-year sales growth in the last nine quarters, the last four of which recorded sales growth over 20%. Industry sales growth is expected to slow in 4Q04 primarily because 4Q03 will be a hard act to follow.
ODU up 35%
ODU, a German-based manufacturer of application-specific connectors, reports sales up 35% through August. New orders (bookings) are up 45%. Sales in China are up an amazing 150%. ODU reports sales up 40% in the MINI-SNAP and MAC modular connector lines. The company reports development of a new series of connectors for nuclear submarines, a new series of PLC connectors, and new developments in the medical market for MRIs, computer tomography, dental equipment, and heart-assist devices.
Finally, Radiall, a French-based manufacturer of RF connectors, reported first half 2004 sales of €84.5 million, an increase of 17.2% over the same period in 2003. Net income varied hugely up to €3.5 million versus a loss of - €3.7 million in the same period last year. Radiall's outlook is for full year growth of 12% in 2004 and projects 5% sales growth in 2005. Such positive numbers from ODU and Radiall indicate that business has improved in Europe.
Because half of Radiall's sales are in the telecommunications market, their growth of 17.2% in the first half of 2004 indicates that health has returned to the telecom market after the difficult going in that market the past two years.
