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United Tech Profit Tops Estimates After Goodrich Deal

Oct. 23 (Bloomberg) -- United Technologies Corp. posted higher third-quarter profit than analysts estimated after boosting aerospace sales by purchasing Goodrich Corp. and a controlling stake in the International Aero Engines venture.

Adjusted profit was $1.37 a share, compared with the $1.19 average of 20 estimates in a Bloomberg survey. Net income climbed 6.9 percent to $1.42 billion, or $1.56 a share, from $1.32 billion, or $1.47, a year earlier, the company said today in a statement.

Along with the Goodrich deal, United Technologies Chief Executive Officer Louis Chenevert has sold units making rocket engines, wind turbines and industrial pumps to refine the company’s focus. Total sales climbed 5.7 percent to $15 billion, with acquisitions outweighing slower revenue growth from existing businesses and unfavorable currency exchange rates.

“We’re seeing some very favorable momentum created by these transactions,” Chenevert said in a telephone interview today after the results were announced. “The good news is our portfolio transformation is now behind us, and the deal costs keep getting better, and the opportunities to integrate and the synergies keep getting better.”

Goodrich Gain

United Technologies fell 1 percent to $77.07 at the market close in New York, outperforming a decline of 1.8 percent on both the Dow Jones Industrial Average and 1.4 percent on the Standard & Poor’s 500 Index.

The Goodrich acquisition will boost United Technologies’ 2013 profit more than company had previously forecast, Chief Financial Officer Greg Hayes said in a telephone interview. Earnings per share will climb by 60 cents next year because of the deal, compared with a previous forecast of 50 cents, Hayes said.

Costs related to the Goodrich acquisition will be only 10 cents a share this year, lower than the 20 cents a share estimated previously, Hartford, Connecticut-based United Technologies said. Restructuring costs companywide will be $600 million, up from a previous projection of $500 million.

United Technologies reiterated its 2012 earnings forecast of $5.25 to $5.35 a share while saying sales would be about $58 billion, at the low end of the range it predicted earlier this year.

Profit at UTC Aerospace, the unit that includes Goodrich, grew more than 30 percent to $271 million.

After accounting for costs associated with the $16.5 billion acquisition, Goodrich had no effect on earnings per share this quarter, the company said. That’s an improvement from the net cost projected by some analysts.

Joseph Nadol, an analyst at JPMorgan Chase & Co., who has an overweight rating on United Technologies’ stock, predicted yesterday that Goodrich-related expenses would reduce quarterly earnings by 11 cents a share.

The acquisition of a controlling interest in International Aero boosted per-share earnings by 3 cents. United Technologies’ Pratt & Whitney unit took over IAE, a joint venture with MTU Aero Engines AG and Japanese Aero Engines Corp., after buying Rolls-Royce Holdings Plc’s stake for $1.5 billion in June.

To contact the reporter on this story: Tim Catts in New York at tcatts1@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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