United Technologies Corp., the maker of Pratt & Whitney jet engines and Carrier air conditioners, forecast 2011 net income and sales that trailed some analysts’ estimates, sending shares lower in late New York trading.
Profit will be $5.05 to $5.35 a share, the company said today in a presentation for investors and analysts in New York. The midpoint of that range is $5.20, short of the average of $5.31 a share based on 9 analysts’ net income estimates compiled by Bloomberg.
Sales will be $56 billion to $57 billion, the Hartford, Connecticut-based company said. That compared with the $57.1 billion average of 17 estimates. The company will move $300 million to an “other” line from a revenue line, Chief Financial Officer Greg Hayes told investors.
Chief Executive Officer Louis Chenevert has pared costs with steps such as cutting at least 18,000 jobs in the past two years to help speed profit growth as the economy improves. He won a spot for Pratt’s geared-turbofan engine as an option on Airbus SAS’s upgraded A320 jet and bought General Electric Co.’s security unit in March, pushing research costs higher.
The company set aside $1.5 billion for acquisitions next year. While Chenevert said he continues to see a “disconnect” between what he wants to pay and prices sought by potential targets, there are “nice opportunities” in fire and security. He also said he wouldn’t rule out a larger purchase if the right target presented itself.
Earnings will increase at least 10 percent in 2011, “despite some significant headwinds,” Chenevert said. Profit will increase in five of the company’s six divisions, while development expenses will cut the total at Pratt & Whitney by $50 million, he said.
So-called organic revenue growth, or sales from businesses owned at least a year, will rise 3 percent to 5 percent, Chenevert said.
United Technologies dropped $2.42, or 3.1 percent, to $75.21 at 6:59 p.m. in New York after the announcement. In regular New York Stock Exchange composite trading, the shares slid 6 cents to $77.63.
The 2011 forecast includes 15 cents a share for contingencies, 17 cents for increased pension expense and 12 cents for higher taxes, according to the company. United Technologies also said it expects spending on commodities to rise.
For 2010, Chenevert repeated the company’s October forecast for earnings of $4.70 a share. That compared with the average estimate for net income of $4.74 a share, based on 9 estimates.
United Technologies reports earnings and issues forecasts based on net income, while many analysts use adjusted results as the basis for their estimates.
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