Inflationary pressures on raw materials and administrative costs pose a risk to profitability. Fluctuating customer demand, driven by economic conditions, currency fluctuations, and international tensions, could negatively impact sales. High interest rates increase borrowing costs. Supply chain disruptions and availability of raw materials are also risks. The success of acquisitions and divestitures is uncertain, with potential integration and separation costs. Goodwill and intangible asset impairment are possible. The company's ability to access capital markets and maintain credit ratings is a risk.
Financial Upside
Acquisitions, particularly of Systems Control, EI Electronics, and Balestro, are expected to increase net sales and operating income. Favorable price realization and operational productivity improvements are expected to boost margins. The sale of the residential lighting business provides a cash inflow. Organic net sales growth in the Electrical Solutions segment, driven by datacenter and renewables, is positive. The company's share repurchase program offers a potential return to shareholders.
