United Technologies Corp (UTX.N) expects "solid" earnings growth next year despite slower-than-expected economic growth in the conglomerate's major markets, Chief Financial Officer Greg Hayes said on Thursday.
United Tech's acquisition of Goodrich Corp, which closed in July, will add about 50 cents to 2013 earnings per share, Hayes said. Earnings will also get a lift from recovering North American markets for heating and cooling equipment and growth in emerging markets, he said.
Headwinds include cuts in defense spending and weakness in some parts of its commercial aerospace business.
"We will drive earnings growth next year - solid earning growth," Hayes told an analyst meeting in Montreal that was monitored via Webcast.
The maker of Carrier air conditioners, Otis elevators and Pratt and Whitney jet engines, reaffirmed its 2012 profit forecast of $5.25 to $5.35 a share but did not provide an earnings-per-share range for next year. Like other diversified manufacturers, it is expected to do so in December.
United Technologies said several factors affecting its results were hard to predict, including pricing, commodity costs, the value of the dollar and the strength of commercial construction, though Hayes noted a closely watched indicator of non-residential construction had recently rebounded. The outlooks for Europe's economies and U.S. tax rates and government spending are also unclear.
Shares rose 0.2 percent to $78.72 in afternoon trading.
The company trimmed its economic growth forecast for the economies in which it operates. The world economy will grow by 2.6 percent next year, down from its year-ago forecast of 3.8 percent.
The United States, which accounts for 38 percent of sales, will grow 1.8 percent in 2013, half a percentage point less than United Tech had earlier forecast.
"Their forecast for 2013 depends on the election," said Harvey Neiman, president of Neiman Funds Management LLC, which owns United Tech shares. "United Tech is well-positioned to take advantage of any increase in the economy. More sectors of the economy are improving."
Growth in Western Europe - contributing 23 percent of sales - will be flat versus 1.6 percent growth expected a year ago. Growth in Japan, China, India, and elsewhere was also revised lower.
The company said it expects to pay down $7 billion in debt over the next few months, partly by repatriating overseas cash and partly from recent asset sales.
United Tech's jet engine unit Pratt & Whitney, which in June closed its acquisition of International Aero Engines, said it expects to increase earnings next year and said it was on a path to double sales by 2020 from 2010's $12.2 billion. Next year's sales will be up by mid-single digits, said David Hess, the division's president.
"We're going to grow earnings next year. I can guarantee that," Hess said.
(Additional reporting by Lynn Adler; Editing by Sofina Mirza-Reid, Bernadette Baum and Kenneth Barry)