Jump Expected In Tuesday’s UTC Revenue Report
By STEPHEN SINGER, AP Business Writer
HARTFORD, Conn. (AP) _ United Technologies Corp. is expected to report a significant jump in second-quarter revenue as it capitalizes on its Goodrich Corp. acquisition and a more integrated building systems division.
The Hartford, Conn., aerospace and building systems conglomerate is slated to report its results before the markets open on Tuesday.
WHAT TO WATCH FOR: CEO Louis Chenevert told analysts in May that airline profitability looks better in 2013 than in previous years. He said United Technologies is benefiting from its $18.4 billion purchase of Goodrich, which closed in July 2012, and a $1.5 billion deal by jet engine maker Pratt & Whitney to buy out Rolls-Royce from a joint venture that makes engines for the Airbus A320.
United Technologies will be about 90 percent done with integrating the numerous parts of its climate, controls and security business by the end of the year, Chenevert said. The unit includes Carrier heating, ventilating and air conditioning, fire and security and building controls businesses.
The segment topped all other United Technologies units in sales in 2012, posting $17.09 billion, or 29 percent of total company sales.
Chief Financial Officer Greg Hayes said in June that United Technologies expects a “very good year.” The rebounding housing market that will help boost the economy and benefit Carrier. “Housing is going to lead us out of this,” he said.
Sterne Agee analyst Peter Arment said in a recent note to investors that financial benefits are “tracking well” for Goodrich and the climate, controls and security business integration. However overall economic conditions limit how well commercial operations can perform, he said.
Fitch Ratings cut its outlook on United Technologies on July 11 to “negative” from “stable,” citing the company’s leverage, which it said remains weak as it reduces debt used to finance acquisitions. Improvements in leverage could be less than expected, because United Technologies’ global markets face challenges and recovery has slowed or been delayed, the ratings agency said.
Pratt & Whitney has had three rounds of job cuts since December _ the most recent announced on Monday _ as it faces reduced military operations in Afghanistan and weakness in the commercial engine spare parts business.
Helicopter maker Sikorsky announced layoffs in June, citing military spending cuts and the bumpy economic recovery.
WHY IT MATTERS: United Technologies’ businesses are often bellwethers for the aerospace industry, commercial building and residential housing markets. In addition, because the Asia-Pacific region accounted for 20 percent of United Technologies’ sales in 2012 and Europe accounted for 26 percent, the quarterly performance can highlight strengths and weaknesses in U.S. manufacturing exports in general.
CFO Hayes told analysts in June that revenue growth in 2013 will likely be stunted, due partly to Europe’s weak economy.
WHAT’S EXPECTED: Analysts polled by FactSet, on average, expect United Technologies to report earnings of $1.58 per share on revenue of $16.37 billion.
LAST YEAR’S QUARTER: In the second quarter of 2012, United Technologies earned $1.62 per share, not including discontinued businesses. Revenue was $13.81 billion.
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