Diversified conglomerate United Technologies Corp. (UTX) reported Wednesday a 7% decline in profit for the fourth quarter, hurt by dwindling demand for commercial construction equipment and military aircraft.
Quarterly revenues declined, offsetting operating margin improvements. Earnings per share for the quarter declined 6.5%, but topped analysts' expectations by a penny. The company also reaffirmed its earnings outlook for the full-year 2010.
In a statement, chairman and chief executive officer Louis Chenevert said, "UTC closed the year with solid performance in the face of continuing difficult end markets. Relentless focus on costs across the business contributed to strong margin expansion in the quarter. Strong working capital performance led full year cash flow from operations less capital expenditures to be 118 percent of net income attributable to common shareowners, including $1.3 billion of global pension contributions."
The Hartford-based parent company of jet engine manufacturer Pratt & Whitney, Otis elevator, and Sikorsky aircraft reported net income of $1.07 billion or $1.15 per share for the fourth quarter, lower than $1.15 billion or $1.23 per share in the prior-year quarter.
On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $1.14 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Results for the latest quarter include a $0.08 per share impact for restructuring costs net of a one time gain, while the year-ago quarter included a net benefit of $0.06 per share from one time gains in excess of restructuring costs. Excluding the impact in both the quarters, earnings grew 5%, or $0.06 per share. Additionally, favorable foreign currency translation contributed $0.04 of the earnings per share growth.
Revenues for the quarter decreased 5% to $14.10 billion from $14.77 billion in the same quarter last year. Eighteen Wall Street analysts had a consensus revenue estimate of $13.84 billion for the quarter. Organic decline was 6 percentage points, and 1 percentage point of net divestitures, partially offset by favorable foreign currency translation of 3 percentage points.
Among others in the sector, Fairfield, Connecticut-based General Electric Co. (GE) reported last week a 19% year-over-year decline in profit for the fourth quarter to $2.94 billion or $0.28 per share from $3.65 billion or $0.35 per share a year ago, hurt by a drop in earnings at GE Capital as well as a 10% decline in quarterly revenues. Total revenues declined to $41.44 billion from $46.21 billion last year.
Another peer, Chicago, Illinois-based aerospace giant Boeing Co. (BA) today reported a profit of $1.27 billion or $1.75 per share, compared to net loss of $86 million or $0.12 per share last year, boosted by strong revenue growth. Total revenues surged 42% to $17.94 billion from $12.66 billion in the same quarter last year.
Segmental Details
The industrial conglomerate operates under six segments such as Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Sikorsky and Hamilton Sundstrand segments.
The Otis segment, which makes elevators, reported an operating profit of $677 million and revenues of $3.20 billion, compared to operating profit of $578 million and revenues of $3.24 billion in the year-ago quarter.
Operating profit of company's Carrier segment, which manufactures heating, ventilating and air-conditioning systems, declined to $146 million from $160 million in the prior-year quarter. Quarterly revenues for the segment dropped to $2.82 billion from $3.26 billion in the same quarter last year.
UTC Fire & Security segment, a provider of security and fire safety products and services, reported an operating profit of $196 million on revenues of $1.53 billion. In the year-ago quarter, the segment reported an operating profit of $147 million on revenues of $1.50 billion.
Operating profit of United Technologies' Pratt & Whitney segment, a supplier of military aircraft engines, for the quarter decreased to $488 million from $520 million in the year-ago quarter. The segment's revenues declined to $3.26 billion from $3.59 billion in the comparable quarter a year ago.
Hamilton Sundstrand, a segment of United Technologies which supplies aerospace products, reported an operating profit of $231 million, lower than $304 million in the year-ago quarter. The segment's revenue decreased to $1.42 billion from $1.56 billion in the prior-year quarter.
During the quarter, Sikorsky segment, which manufactures military and commercial helicopters, earned operating profit of $202 million on revenues of $1.95 billion. This compares to an operating profit of $152 million on revenues of $1.60 billion in the same quarter last year.
Other Metrics
Segment operating profit for the fourth quarter was flat with the year-ago quarter at $1.81 billion, while operating margin expanded 110 basis points to 13.7%. Adjusted consolidated operating profit, excluding items, were $1.92 billion, up from $1.80 billion in the same quarter last year, while adjusted operating margin grew 150 basis points to 14.5%.
Selling, general and administrative for the quarter were $1.56 billion, down from $1.65 billion in the prior-year quarter. Restructuring and other charges for the quarter totaled $135 million. Share repurchase during the quarter was $320 million, and acquisition spending was $146 million.
The company ended the fourth quarter with cash and cash equivalents of $4.45 billion, compared to $4.33 billion at the end of the year-ago quarter.
United Technologies in mid-November said it has agreed to acquire General Electric Co.'s (GE) Security business for $1.82 billion in a transaction approved by the Boards of both companies. The Security business will become part of United Technologies' Fire & Security business, which is headquartered in Connecticut and led by William Brown, president, UTC Fire & Security.
The acquisition of the division would help United Technologies to add more than $6 billion in annual sales in the area, in order to expand in a sector that it estimates to be worth about $100 billion. United Technologies expects the transaction to be earnings neutral in 2010, after restructuring and transaction costs. The company also anticipates that the cost synergies will make it accretive in 2011 and beyond.
Full-Year Highlights
For fiscal 2009, United Technologies reported a net income of $3.83 billion or $4.12 per share, lower than $4.69 billion or $4.80 per share in the previous year. Analysts expected the company to report full-year 2009 earnings of $4.11 per share. Revenues for the full year declined 11% to $52.92 billion from $59.76 billion reported in fiscal 2008. The Street was looking for fiscal 2009 revenues of $52.73 billion.
Looking Ahead.......
"Year over year order rates have remained stable, although at low levels, and we saw increases in some Asian economies, notably China. While order rates will keep pressure on our top line, particularly in the first half of 2010, we anticipate that benefits from structural cost actions will allow us to deliver earnings growth of 7 percent to 13 percent with 2010 earnings per share of $4.40 to $4.65."
The company reaffirmed its earnings forecast for the full-year 2010 in a range of $4.40 to $4.65 per share, up 7% to 13% from fiscal 2009. Analysts expect the company to report earnings of $4.60 per share for fiscal 2010.
While providing initial guidance for fiscal 2010 last month, the company projected revenues to be between $54 billion and $55 billion. Analysts currently anticipate revenues of $54.47 billion for the full-year 2010.
Chênevert stated then, "Exceptional execution, aggressive restructuring, and strategic capital allocation have positioned UTC to resume earnings growth in 2010 even in the face of continuing difficult end markets."
Further, the company had said that it expects continued challenges in the North American and European commercial construction and commercial aerospace OEM markets in 2010. "However, some recovery in our short cycle commercial businesses, our strong aftermarket content, continued strength in the military businesses, and benefits from a weaker U.S. dollar will allow us to grow the top line modestly," Chênevert noted.
Stock Quote
UTX closed Tuesday's regular trading session at $68.47, up $0.47 on a volume of 5.0 million shares, higher than the three-month average volume of 4.38 million shares. In the past 52-week period, the stock has been trading in a range of $37.40 to $72.94.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.