UPDATE 4-United Tech profit beats Street view, shares rise

* Posts Q1 EPS 93 cents/shr, beating 90 cent consensus

* Raises low end of 2010 EPS forecast, sees $4.50-$4.65

* Cites growth in emerging markets

* Shares up 1.8 percent
(Adds investor comment, details)

By Scott Malone

BOSTON, April 21 (BestGrowthStock) – Diversified U.S. manufacturer
United Technologies Corp (UTX.N: ) reported profit that beat Wall
Street’s expectations, as the payoff of a hefty cost-cutting
program offset weaker-than-expected revenue.

The world’s largest maker of elevators and air conditioners
recorded a 20 percent rise in earnings on Wednesday, ending a
four-quarter streak of declines and sending its shares up 1.8

United Tech raised the low end of its 2010 profit per share
forecast by a dime, but its chief financial officer cautioned
investors that the forecast counts on a resumption of revenue
growth in the second half of the year.

“Order trends are improving and that’s all in line with our
expectations for organic growth to resume in the second half of
the year,” CFO Greg Hayes said on a conference call with
analysts. “We feel a lot more confident in the guidance, but a
lot of that guidance confidence is coming from the cost
traction that we’ve seen.”

Chief Executive Louis Chenevert last year led the Hartford,
Connecticut-based company through an aggressive cost-cutting
program that included eliminating some 15,000 jobs.

Sales were weaker than expected at the company’s Sikorsky
helicopter and fire and security equipment businesses, Hayes
said. The company held its full-year sales forecast steady,
looking for overall growth of 2 percent to 4 percent.

United Tech generates a large chunk of its revenue from
maintaining equipment it has already sold. That helped keep its
top line relatively stable through the recession, but will also
mean a slower snap-back in total sales growth.

“There’s not as much of an immediate flip in new orders
here that can drive revenue to swivel quickly,” said Jason
Small, assistant portfolio manager at Chartwell Investment
Partners in Berwyn, Pennsylvania, which manages about $5.5
billion in assets and holds United Tech shares.

Small called the results “a steady-as-she-goes quarter.”

United Tech shares rose $1.32 to $75.52 in midday trading
on the New York Stock Exchange. Earlier, they touched $75.98,
their highest since January 2008.


First-quarter profit (Read more your timing to make a profit.) attributable to common shareholders
came to $866 million, or 93 cents per share, topping the 90
cents per share analysts had expected, according to Thomson
Reuters I/B/E/S. A year earlier the company earned $722
million, or 78 cents per share.

The 2010 result included 5 cents per share of restructuring
costs, less than the 9 cents per share recorded a year before.

Deutsche Bank analyst Nigel Coe noted that the beat on
earnings “was driven entirely” by one-time items, including
lower restructuring charges and research expenses.

“Revenue performance was soft,” Coe added.

Revenue fell 1.3 percent to $12.09 billion, below the
$12.26 billion analysts had expected.

United Tech, which also makes Pratt & Whitney jet engines,
boosted the low end of its 2010 profit forecast, predicting a
range of $4.50 per share to $4.65 per share, up from $4.40 to

The company expects its overall research and development
budget, which declined 3 percent to $397 million in the
quarter, to notch an overall increase of $150 million in 2010
as it pushes ahead on its geared turbofan aircraft engine and
integrates the GE Security unit it recently acquired.


United Tech said demand has begun to pick up for
economically sensitive products like Carrier air conditioners,
which are ordered on shorter notice than big-ticket items like
aircraft engines.

It said that new equipment orders at its Otis elevator unit
were up 9 percent.

So far this year, United Tech shares are up about 56
percent, outpacing the 36 percent rise of the Dow Jones
industrial average (.DJI: ), of which it is a component.

The company, which bought back $500 million of its shares
in the quarter, plans to buy back another $1 billion this year
and has $900 million available in its takeover budget.

Several big U.S. industrials have beat Wall Street’s
expectations for the first quarter, but investors have kept the
bar high, looking for strong revenue as an indication that CEOs
had more than cost-cutting to thank for profit growth. Shares
of both General Electric Co (GE.N: ) and Eaton Corp (ETN.N: )
declined after they posted better-than-forecast profit.

United Tech’s competitors include Eurocopter, a unit of
EADS (EAD.PA: ), in helicopters; GE in jet engines; and
ThyssenKrupp AG (TKAG.DE: ) in elevators.

Investing Research

(Reporting by Scott Malone; Editing by Derek Caney and Gerald
E. McCormick)

UPDATE 4-United Tech profit beats Street view, shares rise