United Technologies 2Q profit rises nearly 14 pct as key housing, aerospace markets improveBy AP
Wednesday, July 21, 2010
United Technologies 2Q net income rises
HARTFORD, Conn. — United Technologies Corp. said Wednesday that its second-quarter profit jumped nearly 14 percent and revenue rose for the first time in nearly two years as aerospace and refrigerated transportation orders improved.
The parent company of jet engine manufacturer Pratt & Whitney, Otis elevators and Sikorsky Aircraft also raised its 2010 earnings guidance based on a strong performance in the first half of the year and improving order rates.
The Hartford, Conn., company earned $1.11 billion, or $1.20 per share, in the period ended June 30, up from $976 million, or $1.05 per share, in the year-ago period.
Revenue rose to $13.89 billion from $13.2 billion a year ago, the first increase since the fourth quarter of 2008.
Analysts surveyed by Thomson Reuters expected the company to report earnings of $1.16 per share on revenue of $13.56 billion.
Results for the quarter include a charge of 12 cents per share for restructuring and one-time items, compared with a charge of 16 cents per share in the second quarter of 2009.
Operating profit rose at each of United Technologies’ businesses, though revenue slumped at Otis elevator and aerospace manufacturer Hamilton Sundstrand. Revenue rose 6 percent at Pratt & Whitney and soared nearly 22 percent in the quarter at Sikorsky, which makes commercial and military helicopters.
“The return of revenue growth, combined with our cost reduction actions, led to solid earnings growth,” CEO Louis Chenevert said in a statement.
He also said the company’s cost-cutting drove operating margins to a “record high.”
Analyst Rick Whittington at JSA Research Inc. said United Technologies is benefiting from a strong industrial recovery and could surpass its revised guidance, which he said is conservative, and raise its guidance again later this year.
“It seems to me they’re keeping a lot in their back pocket for the next quarter,” he said.
New equipment orders rose 12 percent at Otis, spare part orders climbed 8 percent at Pratt & Whitney and 7 percent at aerospace manufacturer Hamilton Sundstrand.
In addition, United Technologies said commercial heating, ventilating and air conditioning equipment orders rose 6 percent at Carrier. The segment’s refrigerated transportation business jumped 39 percent.
It’s the second consecutive strong quarter for Carrier, which went through a “portfolio transformation,” Chief Financial Officer Greg Hayes told investors and analysts on a conference call.
United Technologies has sold off businesses for $2 billion at Carrier since 2008 and expects to generate another $500 million to $1 billion from sales in the next 18 months, he said.
Carrier will be smaller, but should be more profitable and have better growth prospects, he said.
United Technologies increased its 2010 profit guidance Wednesday for Carrier to $250 million from $175 million.
Carrier was among the first United Technologies businesses to feel the impact of the recession in 2007 when the housing market and residential orders fell sharply. Its refrigerated transportation container business plunged 80 percent in 2008.
United Technologies’ aerospace businesses were hurt as the airline industry made deep cuts during the recession, but the company experienced improvement in that area in the period. Operating profit at Pratt & Whitney jumped nearly 12 percent and rose 9 percent at aerospace manufacturer Hamilton Sundstrand.
Otis elevator, which benefited from a construction boom in China, posted a 3.9 percent drop in revenue for the quarter, but operating profit was up less than 2 percent.
Sikorsky’s commercial helicopter market remains weak with four orders in the quarter, United Technologies said. But strong military business has boosted the backlog to $10.5 billion.
United Technologies raised its profit guidance for 2010, based on strong performance in the first half of the year. It now expects to earn between $4.60 per share and $4.70, up from a range of $4.50 per share to $4.65. The range includes a charge of 20 cents per share for restructuring and one-time items.
Chenevert said the company’s cash generation remains strong. United Technologies said it will increase share repurchases this year to $2 billion, up from a prior expectation of $1.5 billion.
Shares slipped 51 cents to $67.03.
Tags: Connecticut, Financing, Hartford, North America, Recessions And Depressions, Restructuring And Recapitalization, United States