United Tech profit tops Street, Carrier strong
(Reuters) - Diversified manufacturer United Technologies Corp (UTX.N) posted first-quarter earnings that topped Wall Street forecasts, helped by better-than-expected demand for residential heating and cooling systems in North America.
Demand for home air conditioners picked up sharply in late March, allowing the company to record a 19 percent rise in orders for Carrier residential cooling systems in the United States. Demand has remained strong through April, said Chief Financial Officer Greg Hayes.
"The warm weather in March helped, but also there had been low levels of inventory out in the system" leaving dealers scrambling to replenish their inventory, Hayes told reporters on a conference call.
Factoring out three units that the world's largest maker of elevators and air conditioners has put up for sale, earnings were $1.26 billion, or $1.31 per share, up 19 percent from $1.05 billion, or $1.06 per share, a year earlier and above the $1.20 per share analysts had expected, according to Thomson Reuters I/B/E/S.
Net income, including write-offs related to those businesses and other one-time items, fell 67.4 percent to $330 million from $1.01 billion, United Tech said on Tuesday.
Sales declined 2 percent to $12.42 billion, below the $12.71 billion Wall Street had expected.
Outside the United States, the economic picture was mixed, Hayes said. "Europe remains awful, I think is the easiest thing to say. The markets there for commercial construction have really been anemic and continues to be so we don't see much signs of a recovery in Europe."
Emerging economy sales were strong in the quarter with the exception of China, where a slump in commercial construction hit elevator demand hard, Hayes said.
The company is in the midst of the biggest changes to its portfolio since Louis Chenevert became chief executive officer in 2008.
In the next few months, United Tech aims to close its largest-ever acquisition -- a $16.5 billion deal for aircraft components maker Goodrich Corp GR.N. It is also trying to sell three smaller businesses -- Rocketdyne, Clipper Windpower and Hamilton Sundstrand's industrial equipment operations -- to raise cash and avoid selling shares to fund the Goodrich buy.
This quarter's results treat the three businesses now on the block as discontinued.
Hayes said the company was in final talks to sell Rocketdyne and expects to sign a contract by the end of the second quarter. He added that a European Union review of the proposed Goodrich deal was progressing as expected.
The Hartford, Connecticut-based company held steady its full-year forecast, which calls for earnings per share of $5.30 to $5.50, flat to up 4 percent, on revenue of $61 billion to $62 billion, up about 10 percent -- including Goodrich and factoring out the three units now on the block.
Citing an uncertain economic environment, the company raised its planned restructuring spending for the year to $450 million from $350 million.
The first quarter went well for the big manufacturers who have reported earnings so far. General Electric Co (GE.N), Honeywell International Inc (HON.N) and Ingersoll Rand Plc (IR.N) have all reported results that topped analysts' forecasts.
(Reporting By Scott Malone in Boston; Editing by Gerald E. McCormick and Maureen Bavdek)