March 12, 2010 / 2:11 PM / 10 years ago

UPDATE 4-United Tech sees double-digit 2010 profit growth

* Sees EPS $4.40-$4.65

* Hamilton Sundstrand outlook up, Otis down

* Shares down 1 pct (Adds CEO quotes, paragraphs 6-7, 15)

By Scott Malone

NEW YORK, March 12 (Reuters) - United Technologies Corp (UTX.N) confirmed it expects 2010 profit growth of 7 percent to 13 percent, saying a better outlook at its Hamilton Sundstrand aircraft unit would help offset headwinds at Otis elevator.

The diversified U.S. manufacturer said gains in China, which has pulled out of a global economic slump far faster than the United States, and the effects of aggressive cost-cutting last year would allow it to return to a growth footing.

“We are very well positioned for 2010,” Chief Executive Louis Chenevert said in a meeting with analysts on Friday. “We’re well positioned for sustainable double-digit earnings growth.”

The world’s largest maker of elevators and air conditioners reiterated its 2010 forecast, first issued in December, of profit of $4.40 per share to $4.65 per share on revenue of $54 billion to $55 billion.

Analysts, on average, expect $4.63 per share on revenue of $54.8 billion, according to Thomson Reuters I/B/E/S.

The company is starting to see demand pick up in its shorter-cycle businesses, such as Carrier air conditioners, which are ordered closer to delivery than, say, jet engines.

“Markets, especially our short-cycle businesses, are starting to resume momentum,” Chenevert told reporters. That recovery could bring “modest” worldwide inflation in materials prices in the coming years, he added.

Hamilton Sundstrand’s raised outlook reflects higher profit margins after a year of cost-cutting.

Otis faces weak demand for elevators in its home North American market, though executives said Western Europe is showing signs of stabilization and Chinese demand has recovered.

Shares of Hartford, Connecticut-based United Tech were down less than 1 percent at $71.46 in afternoon trading on the New York Stock Exchange. Over the past year, the blue-chip shares have gained 76 percent, outpacing the 48 percent rise in the Dow Jones industrial average .DJI.


Major U.S. industrials, including United Tech, General Electric Co (GE.N) and Caterpillar Inc (CAT.N), are navigating what thus far has been an uncertain economic recovery in the United States after a brutal downturn, and are counting on quicker growth outside the United States to offset sluggish demand at home.

Carrier’s chief, Geraud Darnis, said U.S. demand for residential heating and cooling systems — which was pounded by the prolonged housing slump — appears to have bottomed out. [ID:N12140164]

United Tech at the start of this month closed its $1.8 billion acquisition of GE’s security products business, its first large deal since Chenevert, 52, was named chairman on Jan. 1, ending a four-year transition of power from George David.

The company is interested in making additional acquisitions in the security and aerospace maintenance sectors but will primarily focus on smaller deals that could boost sales in key emerging markets, including China and India. It is unlikely to do another deal on the scale of GE Security in the near future, Chenevert said.

“I don’t see big transactions at this point,” Chenevert said.

United Tech’s competitors include Eurocopter, a unit of EADS EAD.PA, in helicopters; GE in jet engines; and ThyssenKrupp AG (TKAG.DE) in elevators.

The company, which also makes Pratt & Whitney jet engines and Black Hawk military helicopters, said on Wednesday that its board had authorized it to buy back to up to 60 million of its shares, worth about $4.3 billion at current prices. It aims to repurchase about $1.5 billion of stock this year. (Reporting by Scott Malone; editing by Gerald E. McCormick, John Wallace, Phil Berlowitz)

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