By STEPHEN SINGER, AP Business Writer
HARTFORD, Conn. (AP) _ United Technologies Corp. is expected to post strong revenue growth for the third quarter, but analysts expect profit to be down slightly from the same three months of 2012 as federal spending cuts pinch the conglomerate’s military business.
The Hartford, Conn., aerospace and building systems conglomerate is set to report its results before the markets open on Tuesday.
WHAT TO WATCH FOR: Chief Financial Officer Greg Hayes warned in September of sharp cuts in U.S. military spare parts orders that are hurting its subsidiary the helicopter maker Sikorsky.
Analyst Cai von Rumohr at Cowen and Co. said in a note to investors early this month that “mostly solid operations” and improved growth at United Technologies’ Climate, Controls and Security division, which makes heating, cooling and building security systems, are expected to help United Technologies overcome a 50 percent drop in Sikorsky’s military parts and maintenance business.
United Technologies has said federal spending cuts will hurt 2013 earnings by 10 cents per share. Most of that has been felt at Sikorsky, Hayes said, and the impact could be bigger next year. The helicopter unit has eliminated 400 jobs this year.
Von Rumohr said orders at United Technologies in the third quarter likely reflected continuing strength in U.S. residential heating and cooling systems, United Technologies’ Otis elevator business in China and North America, strong demand for aerospace parts and maintenance, U.S. commercial construction and the improving economy in Europe.
Sterne Agee analyst Peter Arment said in a note to investors in early October that the performance of United Technologies’ Climate, Controls and Security, aerospace and jet engine maker Pratt and Whitney businesses are expected to more than compensate for what United Technologies sees as “bumps in the road.” Those would include a potential impact of the partial government shutdown on Sikorsky and costs weighing on Otis related to moves from Nogales, Mexico, and Bloomington, Ind., to Florence, S.C.
United Technologies has said it expects a charge of about $50 million this year for Otis.
WHY IT MATTERS: How United Technologies’ businesses perform often provides a view of the aerospace industry, commercial and residential real estate markets and military sales. The Asia-Pacific region represented 20 percent of the conglomerate’s sales in 2012 and Europe accounted for more than one-fourth, showing strengths and weaknesses in U.S. manufacturing.
WHAT’S EXPECTED: Analysts polled by FactSet, on average, expect United Technologies to report earnings of $1.54 per share on revenue of $16.21 billion.
LAST YEAR’S QUARTER: In the third quarter of 2012, United Technologies earned $1.56 per share, which included 19 cents from discontinued operations from companies it sold. Revenue was $15.04 billion.
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