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Aptiv beats estimates on price hikes, warns of vehicle production constraints

By Raechel Thankam Job

(Reuters) -Aptiv Plc's third-quarter results beat analyst estimates on Thursday aided by price hikes amid higher demand, but the auto parts supplier warned that vehicle production levels will be hit next year due to macro pressures and supply constraints.

A continued tightness in supply chain is clipping the production capabilities of auto suppliers like Aptiv amid higher raw material costs, foreign exchange impact and economic disruptions in Europe.

The company also flagged pullbacks in some China production schedules and cited renewed concerns over the COVID lockdowns.

"There is some heightened concern around the lockdowns we're hearing, certainly not to the extent we saw in the second quarter," said Chief Financial Officer Joseph Massaro, while noting a potential upside in the region's production in the fourth quarter.

So far, Aptiv has navigated the ongoing production challenges by pushing the rising costs from material inflation and supply chain diruptions onto its customers. It will continue the practice in 2023 as well.

"Efforts around passing on higher costs appear to be making progress as margins tracked ahead of expectations," Oppenheimer analyst Colin Rusch said.

Meanwhile, Aptiv flagged the potential impact from energy shortages in Europe. "I think Europe remains a challenging environment for the foreseeable future," Massaro added.

Europe's energy crisis could cut the region's car production by close to 40%, or more than 1 million vehicles, per quarter through the end of 2023, auto forecaster S&P Global Mobility warned last month

Still, Aptiv expects net sales for the full year to be between $17 billion and $17.3 billion.

The company reported net sales of $4.6 billion for the reported quarter, above average analysts' expectation of $4.3 billion, according to Refinitiv data.

Excluding items, profit came in at $1.28 per share, compared with expectations of 99 cents per share.

(Reporting by Raechel Thankam Job and Aishwarya Nair in Bengaluru; Editing by Subhranshu Sahu and Shailesh Kuber)