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United Tech cuts profit forecast; sales fall 5 percent
(Reuters) - United Technologies Corp (UTX.N) reported a 4.6 percent drop in quarterly sales and cut its earnings forecast for the rest of the year, as a slowing Chinese economy and Europe's financial woes eroded demand for its elevators and jet engine parts.
The world's biggest maker of elevators and escalators also said on Thursday that it had won final regulatory approvals for its $16.5 billion acquisition of Goodrich Corp GR.N, a maker of aircraft landing gear, setting the stage for that deal to close later this week.
United Tech, which also makes Pratt & Whitney jet engines and Sikorsky helicopters, now expects earnings to be roughly flat for the year on a 5 percent rise in revenue, a revision that takes into account the decline in the value of the euro.
Its shares were up 0.5 percent at $73.00 in premarket trading.
This week United Tech wrapped up two unit sales it had been counting on to help fund the Goodrich acquisition. Late on Wednesday it agreed to sell some industrial component parts of its Hamilton Sundstrand arm to Carlyle Group LP (CG.O) and BC Partners Ltd for $3.46 billion, just two days after reaching a $550 million deal to sell its Rocketdyne space arm to GenCorp Inc (GY.N).
Those deals helped the company sharply reduce the amount of equity it needed to issue to fund the Goodrich acquisition. When it announced the deal in September, it had planned to sell $4.6 billion in new common shares. It backed away from that move, which was unpopular with stockholders and last month sold just $1 billion of convertible notes.
The Hartford, Connecticut-based company lowered its full-year earnings forecast to a range of $5.25 to $5.35 per share, down from an April outlook of $5.30 to $5.50.
United Tech said it expected 2012 sales of $58 billion to $59 billion, compared with the previous forecast of $61 billion to $62 billion.
United Tech said second-quarter net income attributable to common shareholders came to $1.33 billion, up less than 1 percent from $1.32 billion a year earlier.
Diluted earnings per share from continuing operations came to $1.62, above analysts' forecast of $1.41, according to Thomson Reuters I/B/E/S.
Revenue fell 4.6 percent to $13.81 billion from $14.47 billion and below Wall Street's $14.44 billion expectation. Factoring out the weakening euro and the sale of some businesses, it would have been up 1 percent.
The results treat Rocketdyne and the Hamilton industrial arms -- as well as United Tech's Clipper Windpower and fuel cell businesses, for which the company is still seeking buyers -- as discontinued.
The euro's fall against the dollar has hit the industrial sector this quarter, as it diminishes the value of sales made in Europe.
United Tech's industrial peers, including General Electric Co (GE.N), Honeywell International Inc (HON.N) and Textron Inc (TXT.N) have largely beaten Wall Street's expectations for the quarter, easing investor worries about a slowing global economy and leaving the Standard & Poor's capital goods industry index .GSPIC up 2 percent over the last five days of trading.
(Reporting by Scott Malone in Boston; Editing by Lisa Von Ahn)
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