July 26, 2012 / 2:46 PM / 6 years ago

United Technologies beats Street in second quarter

(Reuters) - United Technologies Corp (UTX.N) reported a second-quarter profit that easily topped analysts’ expectations and won final regulatory approval on Thursday for its $16.5 billion takeover of Goodrich Corp GR.N, setting the stage for the deal to close this week.

Shares of United Tech rose nearly 1 percent in morning trading, as the higher-than-expected profit overshadowed the company’s warning that full-year earnings would be roughly flat with 2011 due to the weak European economy.

The world’s largest maker of elevators and air conditioners said it would step up its planned restructuring spending to $500 million this year from a prior $450 million target, as it copes with a slowing economy.

This week, the company reached deals to sell two smaller businesses to help fund its largest-ever takeover.

Second-quarter net income attributable to common shareholders came to $1.33 billion, up less than 1 percent from $1.32 billion a year earlier.

Earnings of $1.62 per share from continuing operations beat the analysts’ average forecast of $1.41, according to Thomson Reuters I/B/E/S.

Revenue fell 4.6 percent to $13.81 billion from $14.47 billion and below Wall Street estimates of $14.44 billion. Factoring out the weakening euro and the sale of some businesses, revenue would have been up 1 percent.

Late on Wednesday, United Tech agreed to sell some industrial component parts of its Hamilton Sundstrand arm to Carlyle Group LP (CG.O) and BC Partners Ltd for $3.46 billion, just two days after reaching a $550 million deal to sell its Rocketdyne space arm to GenCorp Inc GY.N.

The quarterly earnings report treats Rocketdyne and the Hamilton industrial arms — as well as United Tech’s Clipper Windpower and fuel cell businesses, for which the company is still seeking buyers — as discontinued.

United Tech shares were up 0.8 percent at $73.22 on the New York Stock Exchange, driven by the beat.

“They crushed it,” said analyst Brian Langenberg, of Langenberg & Co.


U.S., European and Canadian authorities issued their final approvals on Thursday for the planned takeover of Goodrich. That deal, first agreed to in September, will boost United Tech’s annual revenues by about $8 billion a year and expand the Hartford, Connecticut-based company’s lineup of aerospace equipment to include landing gear, wheels and brakes.

As a condition of the approval, United Tech will need to sell Goodrich’s power generation and small-engine control operations.

United Tech Chief Executive Officer Louis Chenevert shook up his company’s portfolio of businesses to get the deal done, putting several business units on the block.

The Hamilton and Rocketdyne deals helped the company sharply reduce the amount of equity needed to issue to fund the Goodrich acquisition. When United Tech announced the deal in September, it had planned to sell $4.6 billion in new common shares. It backed away from that move, which was unpopular with stockholders, and last month sold just $1 billion of convertible notes.


United Tech lowered its full-year earnings forecast to a range of $5.25 to $5.35 per share, down from an April outlook of $5.30 to $5.50.

The company said it expected 2012 sales of $58 billion to $59 billion, compared with the previous forecast of $61 billion to $62 billion.

The euro’s fall against the dollar has hit the industrial sector this quarter, as it diminishes the value of sales made in Europe.

United Tech’s industrial peers, including General Electric Co (GE.N), Honeywell International Inc (HON.N) and Textron Inc (TXT.N) have largely beaten Wall Street’s expectations for the quarter, easing investor worries about a slowing global economy.

United Tech shares are roughly flat for the year, lagging the 4 percent rise of the Dow Jones industrial average .DJI.

Reporting by Scott Malone in Boston; Editing by Lisa Von Ahn

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