By Lewis Krauskopf
Jan 22 United Technologies Corp, the
world's largest maker of elevators and air conditioners,
reported a rise in fourth-quarter profit that topped estimates,
helped by a delay in shipping a helicopter order.
The diversified manufacturer said it did not ship eight
helicopters under a Canadian contract, as expected, which
actually benefited its profit because they are sold at a loss,
helping the profit top estimates. However, revenue was reduced
by about $400 million because the helicopters were not
Costs for the maritime helicopters have increased under the
contract with the Canadian government, to the point that each is
now expected to cost the company's Sikorsky unit more to make
than the price covers. The company expects to deliver the
helicopters later this year.
Total revenue at United Technologies, which also produces
Pratt & Whitney jet engines and Black Hawk helicopters, rose 1.9
percent to $16.76 billion, it said on Wednesday. That was about
$330 million short of analysts' expectations.
United Technologies shares rose 1 percent to $116.12 in
morning trading. The stock, a component of the Dow Jones
industrial average, jumped about 37 percent in 2013,
outpacing the broader U.S. market.
In an interview, United Technologies Chief Executive Officer
Louis Chenevert pointed to revenue growth of 4 percent,
excluding acquisitions and even with the delayed helicopter
"The combination of organic growth and our sustained cost
reduction has us well-positioned for another good year,"
United Technologies backed its 2014 financial targets, which
the company set last month.
The company had improved its 2013 earnings outlook in recent
quarters, as cost cuts offset weaker revenue than it expected at
the start of the year.
Earnings from continuing operations soared 53 percent to
$1.45 billion, or $1.58 per share. That topped the average
analyst estimate of $1.53 per share, according to Thomson
The delay in the Canadian helicopter order boosted earnings
by 6 cents per share compared with expectations, the company
On a net basis, income fell 29 percent to $1.46 billion due
to a big year-earlier gain from the sale of several industrial
Operating profit rose across all five of business segments.
The company gave other encouraging signs for its aerospace
businesses. Orders for Pratt & Whitney engine spare replacement
parts rose 20 percent, while such orders increased 19 percent
for the aerospace segment that makes other plane components.
"It's nice to see the aftermarket activity picking up," said
Peter Arment, an analyst at Sterne Agee. "That's good momentum."
Brian Langenberg, an analyst with independent research firm
Langenberg & Co, pointed to strong performance in the segment
that includes climate control products. Profit margins in that
segment rose to 14.8 percent in the quarter from 11.1 percent a
Langenberg also cited an 8 percent increase in orders at its
Otis elevators division.
To take advantage of growth in cities in emerging markets,
United Technologies last year reorganized its elevator and
climate segments under one business.