By STEPHEN SINGER, AP Business Writer
HARTFORD, Conn. (AP) _ United Technologies Corp. is expected to post a modest increase in revenue for the fourth quarter and stronger sales growth for 2013, while its emphasis on cost-cutting drives a stronger boost in profit.
The Hartford, Conn., aerospace and building systems conglomerate is set to report its results before the markets open on Wednesday.
WHAT TO WATCH FOR: Chief Executive Officer Louis Chenevert told analysts in December that United Technologies, parent company of jet engine maker Pratt & Whitney, helicopter manufacturer Sikorsky Aircraft and other businesses, picked up the pace of cost-cutting as it anticipated growth in its aerospace and building systems businesses.
It announced in October it would spend $500 million on restructuring in 2013, up from $350 million announced earlier in the year.
“It’s clear to me we had a softer recovery than we expected this time last year, but we still delivered on the high end of the original range that we portrayed here a year ago,” Chenevert said.
United Technologies said in December 2012 that it expected 2013 earnings per share of between $5.85 and $6.15 on sales of $64 billion to $65 billion. Last month, it said it expects 2013 earnings per share of about $6.15 on sales of about $63 billion.
Sterne Agee analyst Peter Arment said in a Jan. 13 note to investors that aerospace companies in the fourth quarter should continue to benefit from rising airline production and healthier repair and maintenance markets.
“While the economic recovery has not been as strong as originally expected, by accelerating restructuring and cost reductions, United Technologies (is) positioned to meet the high end of earnings per-share targets,” he said.
Chenevert told analysts the aerospace repair and maintenance market “came through” in the third quarter and continued in the fourth.
“We also saw stability in Europe,” he said.
That’s an improvement from earlier last year when Chief Financial Officer Greg Hayes said Europe’s weak economy was a drag on revenue. Europe accounted for more than one-fourth of United Technologies’ sales in 2012.
WHY IT MATTERS: The performance of subsidiaries Otis elevator and heating and cooling equipment manufacturer Carrier demonstrate strengths and weaknesses in residential and commercial real estate markets. United Technologies businesses such as aerospace parts maker Goodrich Corp. and Pratt & Whitney indicate the health of the aerospace industry. And Sikorsky, manufacturer of the Blackhawk helicopter, spotlights military markets.
WHAT’S EXPECTED: Analysts polled by FactSet, on average, expect United Technologies to report earnings of $1.53 per share on revenue of $17 billion for the fourth quarter and $6.17 per share on revenue of $62.95 billion for the year.
LAST YEAR’S QUARTER: United Technologies posted fourth-quarter earnings per share of $1.05 on revenue of $16.44 billion and $5.35 per share on revenue of $57.71 billion for 2012.
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