By Calvin Biesecker
United Technology Corp. [UTX] yesterday posted strong fourth quarter results driven by sales and profit gains at each of its operating segments and the diversified industrial company expects continued solid results in 2008.
Despite predictions of difficult economic conditions in many parts of the world, UTC officials said they don’t foresee “dire economic consequences” and said the company is “built to outperform.”
Net income in the quarter increased 23 percent to $1.1 billion, $1.08 earnings per share (EPS), from $865 million (87 cents EPS), beating consensus estimates by two cents EPS. Sales increased 15 percent to $14.7 billion from $12.8 billion, with organic growth adding 8 percent to the gain. Foreign currency adjustments contributed 5 percent to the sales increase and two cents to EPS. Free cash flow was $1.6 billion.
UTC’s industrial commercial businesses all fared nicely, particularly the Carrier air conditioning, heating and refrigeration segment, which increased sales and profits on strength in the commercial and international sectors, more than offsetting a weak housing market in the United States. Carrier, Otis elevator and Fire & Security, all reported double-digit gains in sales and operating profits.
The company’s aerospace and defense businesses also performed well, led by helicopter maker Sikorsky, which boosted operating profits 83 percent to $110 million and sales 18 percent to $1.3 billion on higher aircraft shipments. UTC expects Sikorsky to continue its strong performance this year with sales growing around 15 percent and operating profits up about 25 percent on increased helicopter deliveries.
At the Pratt & Whitney (P&W) commercial and military aircraft engine segment, profits rose 16 percent to $496 million on a 6 percent increase in sales to $3.2 billion, driven by higher sales at the Power Systems and Pratt Canada units and the completion of certain contract milestones. Sales of military aircraft engines were down while large commercial aircraft engine deliveries were up slightly. Company officials said higher commodity and engineering development costs pressured profits. In 2008 P&W’s profits are expected to increase 10 percent on about a 5 percent sales gain.
UTC’s Hamilton Sundstrand aerospace and industrial products segment also turned in good results, with profits up 12 percent to $254 million and sales up 15 percent to $1.5 billion on growth in the aerospace aftermarket and industrial businesses. This year, segment profits are expected to be around 10 percent on sales in the upper single digits.
For 2007 UTC’s net income increased 13 percent to $4.2 billion ($4.27 EPS) versus $3.7 billion ($3.71 EPS) a year ago. Sales increased 14 percent to $54.8 billion from $47.8 billion in 2006, with 9 percent of the growth organic. Free cash flow for the year was $4.2 billion.
UTC confirmed its earnings guidance for 2008 at between $4.65 to $4.85 EPS with sales of about $59 billion.