TE Connectivity Ltd.

TE Connectivity's strong presence will support outperformance due to long-term secular trends toward electric and engineering content in vehicles. The automotive end market is a material driver of TE Connectivity's operating performance and profits. Over the past few years, automotive contributed 40%-45% to revenue, including sensor revenues, and generated higher-than-corporate-average profitability. We expect the company to maintain its strong presence in automotive markets and competitive positioning. These are key factors that support our 'A-' rating. The stable outlook reflects our expectation for sustained improvement in TE Connectivity's key end markets in 2021 that supports mid-single-digit percent revenue growth and annual FOCF of $1.4 billion-$1.6 billion. The outlook also reflects our expectation for stable profitability as it executes ongoing cost-reduction initiatives.

...We expect global growth and the rebound in auto production to support steady operational performance. TE Connectivity Ltd. reported continued sequential improvements in its transportation segment (about one-third of revenues) during its first fiscal quarter ending Dec. 25, 2020, which we expect to continue in 2021 and 2022. S&P Global Ratings expects global light vehicle sales growth of 7%-9% in 2021 and 6%-8% in 2022 following an approximate 20% decline in 2020 due to COVID-19-related disruption. While demand in 2021 to be lower than it was in 2019, the rebound in automotive markets and electric content growth will continue to support TE Connectivity's business recovery in 2021. Additionally, semiconductor supply chain shortages may affect global units over the next few quarters, though we expect TE Connectivity to exhibit above-market growth due to content expansion. We expect the company to experience somewhat stable pricing because of long-term arrangements with customers mainly in...

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