ITT Corp., the industrial and defense products maker planning to split in three, projected $500 million in after-tax breakup costs and said first-quarter profit fell 15 percent.
Separation costs in the first quarter hurt pretax profit by $85 million, the White Plains, New York-based company said today in a statement. The breakup is scheduled to close by the end of 2011, ITT said.
ITT said in January it would split into water, industrial and defense companies, in an attempt to isolate the effect of planned cuts in U.S. military programs and to let each business focus on core strengths. ITT reduced its 2011 sales forecast to $11.3 billion from $11.4 billion, citing uncertainty in the defense market.
Net income fell to $124 million, or 66 cents a share, in the first quarter, from $146 million, or 79 cents, a year earlier. Profit, excluding some costs, was 98 cents a share, higher than the 93-cents average of analysts’ estimates compiled by Bloomberg. Revenue climbed 7.1 percent to $2.76 billion.
“Despite the eye-watering half a billion dollar net cost, we think investors will continue to focus on the perceived positive benefits of the impending breakup of ITT before the end of the year, and welcome the news that it is still on track,” Robert Stallard, a New York-based analyst with RBC Capital Markets, wrote today in a note to investors.
Profit and sales in the first quarter fell at the defense division, the company’s biggest business, while rising at the fluid and the control divisions, according to the statement.
The company narrowed its full-year profit forecast range to $4.70 to $4.82 a share, from $4.62 to $4.82.