Business

April 24, 2013

United Technologies first quarter net income, revenue rise

Stephen Singer
Associated Press

The biggest aerospace deal ever is paying off for United Technologies Corp.

The Hartford, Conn., aerospace and building systems conglomerate said April 23 that its purchase of aerospace parts maker Goodrich Corp. boosted first-quarter revenue even as sales flagged in Europe, which is struggling with a weak economy. The $18.4 billion deal was announced in 2011 and closed in July 2012.

ìGoodrich has been nothing but good news for us,î Chief Financial Officer Greg Hayes told investor analysts on a conference call.

Revenue in the January-to-March period rose 16 percent to $14.4 billion from $12.4 billion in the year-ago quarter. Excluding the Goodrich acquisition, sales declined 2 percent from a year ago. United Technologies said that was due to Europe’s slack economy and weak commercial aerospace repairs and maintenance.

Net income of $1.27 billion, or $1.39 per share, was up from $330 million, or 36 cents per share, in the year-ago quarter that included discontinued operations of companies sold by United Technologies to raise cash for its Goodrich purchase. Excluding the discontinued operations, profit in last year’s first quarter would have been $1.31 per share.

Analysts polled by FactSet, on average, expected earnings of $1.29 per share on revenue of $14.94 billion.

CEO Louis Chenevert said he expects a ìgradual resumptionî of growth this year as the economy and markets improve. In addition to the aerospace industry, commercial and residential real estate markets are important to United Technologies, which sells elevators and escalators, heating and cooling components and fire and safety equipment.

Edward Jones analyst Christian Mayes said a 29 percent increase in orders for subsidiary Otis elevator in China, the world’s largest elevator and escalator market, will likely offset weakness in Europe. He said United Technologies will likely cut costs at Goodrich and its $1.5 billion purchase of Rolls-Royce from a joint venture that makes engines for the Airbus A320.

Last year it was closing on acquisitions, this year it’s about integrating the acquisitions and finding savings, he said.

Among United Technologies’ segments, its aerospace systems business posted the biggest sales increase in the quarter, to $3.26 billion, more than double $1.24 billion posted in the first quarter of 2012.

The CFO Hayes said airline traffic is increasing and airlines are projected to earn more than $10 billion this year, buoying expectations for rising order rates in 2013.

So we’ll keep a close eye on the aerospace aftermarket, look for signs of more stabilization in Europe, but order rates and macroeconomic trends broadly support our assumption for growth as we move through the year, he said.

Automatic federal budget cuts that took effect last month are beginning to have an impact on United Technologies’ military business, with aerospace repairs and maintenance down 10 percent in the quarter, Hayes said.

Fighter jets also are standing down for the rest of the year as exhibitions are canceled, he said.

He said he’s concerned about furloughs by air traffic controllers that could drive up commercial airline costs, though that should be a ìrelatively small impactî on United Technologies. The company is standing by its estimate of a 10 cent-per share profit hit due to the federal spending cuts, Hayes said.

Sales for the quarter declined 7 percent at Sikorsky Aircraft as the helicopter manufacturer adjusts to reduced U.S. military involvement in Afghanistan. United Technologies’ climate controls and security business also posted a 7 percent drop in sales in the first quarter.

The company, which is raising significant amounts of cash from divestitures to exit non-essential business and comply with federal competition rules, said it will pay down $2 billion of debt this year, up from an earlier $1 billion estimate.




All of this week's top headlines to your email every Friday.


 
 

 

Headlines July 23, 2014

News: Israel’s Iron Dome defense in line for tripled U.S. spending - Israel’s iron Dome missile defense system may end up getting triple the U.S. funding that the Defense Department sought for it in March. Ukraine asked U.S. for systems to counter Russian missiles - A month before the United States says a Russian missile likely brought...
 
 

News Briefs July 23, 2014

U.S. military deaths in Afghanistan at 2,194 As of July 22, 2014, at least 2,194 members of the U.S. military had died in Afghanistan as a result of the U.S.-led invasion of Afghanistan in late 2001, according to an Associated Press count. The AP count is three less than the Defense Department’s tally. At least...
 
 
Raytheon photograph

Raytheon completes key Air, Missile Defense Radar reviews

Raytheon photograph Partially-populated, full-sized Air and Missile Defense Radar array. Raytheon has completed two critical program reviews for the new Air and Missile Defense Radar, the U.S. Navy’s next generation integ...
 

 
Insitu photograph

Insitu demonstrates long endurance capabilities of Integrator unmanned aircraft

Insitu photograph Insitu’s Integrator unmanned aircraft recovers via SkyHook; the aircraft recently completed a 24-hour endurance flight. Insitu announced July 22 the successful 24-hour flight of its Integrator unmanned a...
 
 

NASA partners punctuate summer with spacecraft development advances

Spacecraft and rocket development is on pace this summer for NASA’s aerospace industry partners for the agency’s Commercial Crew Program as they progress through systems testing, review boards and quarterly sessions under their† Space Act Agreements with the agency. NASA engineers and specialists continue their review of the progress as the agency and partners move...
 
 

U.S. Navy selects Northrop Grumman for ship self-defense system

The U.S. Navy has awarded Northrop Grumman a $12 million task order for a full range of engineering services to continue modernizing the Ship Self-Defense System Mark 2. The contract has a potential value of $61 million over five years, if all options are exercised. SSDS MK2 is a combat system designed for anti-air defense...
 




0 Comments


Be the first to comment!


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>