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UPDATE 3-Auto parts maker Dana flags rising costs, chip shortage hit

(Recasts, adds details from conference call)

April 28 (Reuters) - Dana Inc warned of shipping constraints and higher costs due to supply chain disruptions as the auto parts maker battles a global semiconductor chip shortage during the COVID-19 pandemic.

Shares of the axle and driveshaft maker fell about 1% to $27.90 in morning trade on Wednesday.

A shortage of chips has led automakers across the world to cut production as semiconductors are used extensively in cars, for everything from engine performance monitoring to parking sensors.

“We remain cautious regarding the uncertain resolution to the chip shortage and resulting production slowdowns,” said Chief Financial Officer Jonathan Collins on a post-earnings call.

Collins warned that the company was seeing a more meaningful impact from the chip constraint during the second quarter in its light vehicle business.

Higher raw material costs and inflated freight prices have also hit Dana, with coronavirus hotspots like Brazil and India adding pressure to an already challenged supply chain.

Collins said he expects higher costs to continue into the second quarter and was also wary about the second half of the year, given the uncertainty surrounding the ongoing supply chain disruptions and regional pandemic containment actions.

STRONG DEMAND

Consumer demand in the United States, however, remains strong driven by low interest rates, stimulus checks and a preference for private vehicles over public transport.

Dana raised its 2021 earnings forecast and signaled higher demand in the heavy vehicle market, after beating first-quarter estimates on strong sales in the light-truck and commercial vehicle segments.

The company now expects full-year adjusted earnings of between $2.10 and $2.60 per share, compared to a prior forecast of between $1.90 and $2.40 per share.

Net income attributable to Dana rose 22.4% to $71 million, or 48 cents per share, in the quarter ended March 31.

Excluding items, the company earned 66 cents per share, above analysts’ estimates of 47 cents, according to Refinitiv data.

Net sales rose 17.5% to $2.26 billion, beating estimates of $2.02 billion. (Reporting by Sanjana Shivdas in Bengaluru; Editing by Shailesh Kuber)

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