Eaton gives downbeat outlook as profit misses forecasts
(Reuters) - Diversified manufacturer Eaton Corp (ETN.N) reported a lower-than-expected quarterly profit on Friday and cut the top end of its full-year earnings outlook, citing slower market growth.
The maker of electrical and hydraulic systems said quarterly sales would have declined 2 percent without the help of acquisitions.
"With global economic growth coming in lower than our earlier expectations, we now believe our markets will grow just 1 percent in 2013," Chief Executive Officer Sandy Cutler said in a statement. He said Eaton had begun 2013 expecting 2 percent to 3 percent growth in its markets.
Second-quarter net income rose to $494 million, or $1.04 per share, from $382 million, or $1.12 per share, a year earlier, when Eaton had far fewer shares outstanding.
Excluding charges to integrate recent acquisitions, earnings were $1.09 per share, 2 cents below analysts' average estimate, according to Thomson Reuters I/B/E/S.
Revenue jumped 37.7 percent to $5.60 billion, driven by the company's 2012 acquisition of Cooper Industries. Analysts were looking for $5.77 billion. Excluding a 40 percent boost from acquisitions, sales fell 2 percent, Eaton said.
The company forecast 2013 earnings, excluding special items, at $4.05 to $4.25 per share, reducing the high end from $4.45. The $4.15 midpoint of the new outlook represents an increase of 5 percent over 2012. Analysts have been looking for $4.35.
Eaton said it was achieving cost savings stemming from the $11.8 billion acquisition of Cooper at a faster pace than expected. It estimated costs savings of $115 million this year from the deal, $25 million higher than it previously expected, and $210 million next year, $30 million more than before.
The acquisition of Cooper expanded Eaton's range of electrical products, such as lighting and wiring devices, to markets ranging from mining to oil and gas and utilities.
Through Thursday, Eaton shares had climbed 29 percent this year, topping a 19.7 percent increase for the S&P 500 .SPX.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and John Wallace)