United Tech Profit Tops Estimates After Goodrich Deal
United Technologies Corp. (UTX) 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 divested units making rocket engines, wind turbines and industrial pumps to refine the Hartford, Connecticut-based company’s focus. Total sales climbed 5.7 percent to $15 billion, with acquisitions outweighing slower organic revenue growth 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.”
The Goodrich acquisition will boost United Technologies’ 2013 profit more than the company had previously said, 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, 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 costs related to the acquisition would reduce quarterly earnings by 11 cents a share.
United Technologies’ Pratt & Whitney unit took control of IAE, a joint venture with MTU Aero Engines AG and Japanese Aero Engines Corp. after buying Rolls-Royce Holdings Plc (RR/)’s stake for $1.5 billion in June. The unit contributed 3 cents to the company’s per-share earnings in the quarter.
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