United Tech sees 2012 profit up as much as 10 percent

NEW YORK Thu Dec 15, 2011 8:41pm EST

NEW YORK (Reuters) - United Technologies Corp (UTX.N) said on Thursday it expected to increase profits by 6 to 10 percent in 2012, despite a slowing U.S. recovery and what it expects to be a prolonged slump in Europe.

In a nod to deteriorating conditions, the world's largest maker of elevators and air conditioners forecast revenue growth of 1.7 to 3.4 percent at its core businesses.

The profit and revenue forecasts omitted the costs and revenue of the company's pending $16.5 billion deal for Goodrich Corp GR.N, its biggest-ever acquisition, which it expects to close in the middle of the year.

The company, which also makes Sikorsky helicopters and Pratt & Whitney jet engines, is planning for several years of slow growth in Europe, Chief Executive Louis Chenevert told reporters after a meeting with analysts.

"Obviously we follow the situation in Europe very closely and we will adjust proactively according to what we see the market's going to do," Chenevert said. "I don't expect at this point in time that we will see a recession (In Europe) but I expect a tough couple of years of pretty soft market."

That stands in contrast to his peers at Honeywell International Inc (HON.N) who told investors earlier on Thursday that they do expect the European economy to slip into recession in the first half of 2012.

The company is considering selling some smaller pieces of its diverse portfolio to avoid selling stock to help fund the Goodrich buy.

"It's a reassessment of the portfolio ...…there's UTC core, which is aerospace, commercial (building products) and then looking at the portfolio, there's a lot of other pieces that I think will be under review and then we'll make the decision," Chenevert said. "I hate equity issuance."

EPS VIEW $5.80 TO $6

The Hartford, Connecticut-based company, which also makes Pratt & Whitney jet engines and Sikorsky helicopters, forecast 2012 earnings of about $5.80 to $6 per share, excluding the Goodrich deal.

Analysts had expected $5.90 per share, according to Thomson Reuters I/B/E/S.

"Our EPS growth outlook for the base business is 10 percent," Chenevert said.

Overall, the Goodrich deal will represent a 50 cent per share drag on earnings next year, reflecting deal costs and the company's suspension of share buybacks, and could leave net income down as much as 3 percent.

United Tech forecast 2012 sales of about $64 billion, including acquired Goodrich revenue, or $59 billion to $60 billion from its base business.

The company forecast the strongest sales growth at its Hamilton Sundstrand aircraft electronics unit, which it expects to grow about 10 percent, and the weakest at Sikorsky helicopters, which it forecast down by mid-single-digit percentages.

The forecast was roughly in line with other 2012 profit forecasts that its fellow diversified manufacturers released this week. General Electric Co (GE.N) estimated "double digit" profit growth, Honeywell International Inc (HON.N) called for growth of up to 12 percent and Danaher Corp (DHR.N) forecast 15 to 20 percent growth.

Since United Tech announced third quarter results in mid-October, order trends and foreign exchange were about in line with expectations, taxes were more favorable, and the company's fire and security business was weaker than expected, Chenevert said.

Foreign exchange and pension costs will likely be challenges next year, the CEO said, but predicting the value of the euro was "almost impossible."

(Reporting By Nick Zieminski and Scott Malone in New York; editing by Bernard Orr and Richard Chang)

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