WRAPUP 4-US manufacturers say demand up after fiscal cliff fight

Wed Jan 23, 2013 12:51pm EST

* United Tech confirms 13 pct profit growth forecast
    * Textron sees 2013 earnings up about 12 percent
    * Housing, commercial construction a lift
    * Shares little changed in early trading


    By Scott Malone
    BOSTON, Jan 23 (Reuters) - Top U.S. manufacturers sounded a
confident note about their expectations for 2013 on Wednesday as
fears of the year-end "fiscal cliff" faded into memory.
    Textron Inc, whose Cessna unit is the world's
biggest maker of corporate jets, laid out an earnings forecast
that would represent growth of about 12 percent, while larger
peer United Technologies Corp, which makes Otis
elevators, Carrier air conditioners and Sikorsky helicopters
among other products, reiterated a projection that its profit
would rise about 13 percent.
    Executives at each company said demand is recovering after a
year-end pause in ordering, when customers worried about a
budget standoff that could have triggered large spending cuts
and higher taxes in the United States.
    "We probably have had more order activity than we're used to
seeing at the beginning of January," reflecting orders that had
been delayed, Textron Chief Executive Scott Donnelly said on a
conference call with analysts. "We'll see a degree of
uncertainty in the jet market as Washington works through its
fiscal challenges, but we believe demand will solidify as those
uncertainties are reduced."
    The Providence, Rhode Island-based company, which also makes
Bell helicopters and EZ-Go golf carts, said it expects sales of
its Cessna corporate jets to pick up this year. 
    Budget battles continue in Washington even after the White
House and Congress averted a possible year-end crisis that
economists called the "fiscal cliff" with warnings of another
possible recession.
    But the current battle seems less daunting to executives in
the face of other signs of a recovering economy.
    "What we see in the economy in the U.S. is that the rebound
in the housing market is really having a pull-through effect on
the rest of the economy," said Greg Hayes, chief financial
officer of United Tech, in an interview. "Commercial
construction is coming back. We saw particular strength in North
America and Asia, not as much of a story in Europe, as you can
imagine." 
    The U.S. housing slump set the 2007-2009 recession in motion
and a slow recovery in that market has been one important drag
on a long, sluggish recovery. Recent government data have shown
a pickup in demand, with a report last week showing housing
starts surged to a four-year high in December.
    
    
    
    'PATH GETS EASIER'
    Hartford, Connecticut-based United Tech, which also produces
Pratt & Whitney jet engines, also noted that airlines' orders
for its spare parts had risen in the quarter, reflecting higher
rates of travel.
    "The path gets a little easier," said Daniel Holland, an
equity analyst at Morningstar, who covers United Tech. "If you
look at all the pieces, a housing recovery here and in China,
and an improving environment for Otis (elevators) in China, they
have decent, positive momentum."
    U.S. lawmakers were expected to vote on Wednesday to extend
by four months the government's ability to borrow money,
effectively suspending rules that allow the nation to borrow no
more than $16.4 trillion. 
    Textron and United Tech also have significant defense
businesses, and some investors worry that the United States will
continue to scale back spending on weapons, such as United
Tech's Black Hawk military helicopters and Textron's heavy
armored vehicles.
    
    GROWTH FORECASTS
    United Tech stood by its forecast, first issued last month,
that called for 2013 earnings to rise about 13 percent to a
range of $5.85 to $6.15 per share, with sales up about 12
percent to a range of $64 billion to $65 billion.
    Textron issued a 2013 forecast that called for profit to
rise by about 12 percent to a range of $2.10 to $2.30 per share,
with revenue up about 6 percent to $12.9 billion.
    The results came a few days after General Electric Co
, the largest U.S. conglomerate, said that it ended 2012
with a record-high order backlog and sounded a confident note on
2013, sending its shares higher on Friday.
    The manufacturing sector has been one of the better
performers this quarter, with 80 percent of the industrial
companies in the Standard & Poor's 500 index topping
analysts' forecasts. That is better than the 68 percent of
companies across the index that have beaten estimates.
    United Tech and Textron shares, each of which had risen
roughly 15 percent over the past six months, outpacing the
broader U.S. market, were little changed in early trading. 
    United Tech rose 38 cents, less than 1 percent, to $88.85
and Textron gained 2 percent to $27.66. Both trade on the New
York Stock Exchange.
    Investors will get more news on the sector later this week,
when 3M Co and Honeywell International Inc are
due to report results.
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