TE Connectivity Ltd.

S&P Global Ratings' stable outlook on Schaffhausen, Switzerland-based TE Connectivity Ltd., a global connectivity and sensors solutions designer and manufacturer, reflects our view that the company will experience weakness in automotive markets, but deliver fairly stable performance across its portfolio. We also expect profitability to remain stable despite ongoing pricing erosion offset by continued efforts to improve margins through cost efficiencies. These factors should lead to good free operating cash generation and a modest reduction in leverage over the next 12-24 months. We could lower the rating on the company if business performance deteriorates as a result of global economic weakness, leading to a lower EBITDA base and debt leverage sustained above 1.75x. We could also lower the rating if

...The company maintains a strong competitive position in automotive end markets that we expect will experience good growth over the next few years due to increased electric content. While we recognize that end-market cyclicality and global trade tensions create some operational uncertainty, TE Connectivity Ltd. maintains a strong presence in automotive end markets (approximately 45% of revenues). We expect automotive production softness to continue affecting the company's operational performance in fiscal 2019, although we believe the company has displayed some signs that its automotive business will outperform global auto production thanks to growing electric content. In addition, we expect the company's local manufacturing strategies to mitigate trade and tariff-related impacts....

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