WRAPUP 2-U.S. manufacturers’ view rosier as demand returns

* United Tech, Textron, Eaton boost 2010 forecasts

* United Tech CFO says “worst is behind us”

* CEOs caution that recovery still uncertain

* Textron, Eaton, United Tech shares rise

By Scott Malone and Nick Zieminski

BOSTON/NEW YORK, July 21 (BestGrowthStock) – Three major U.S.
manufacturers raised their profit targets for the rest of the
year on Wednesday, saying they were confident a rebound in
demand for industrial goods would hold.

The shares of United Technologies Corp (UTX.N: ), Textron Inc
(TXT.N: ) and Eaton Corp (ETN.N: ) rose after they posted
second-quarter results that topped Wall Street’s expectations,
easing concerns the economy might be sliding back into
recession.

All three companies also posted better-than-expected
revenue, meaning they had more than cost-cutting to thank for
their growth. In addition, United Tech noted that orders, an
indicator of future sales, were up across its business units,
something Chief Financial Officer Greg Hayes called “a sign
that the worst is behind us.”

The revenue beats stood in contrast to recent reports from
largest U.S. conglomerate General Electric Co (GE.N: ), as well
as banks, including Bank of America Corp (BAC.N: ) and Citigroup
Inc (C.N: ), which topped Wall Street’s profit expectations, but
missed the mark on revenue and saw their shares slide.
[ID:nN20161034]

“As you look at the order rates, it suggests pretty good
global growth,” said analyst Jeff Hammond of KeyBanc Capital
Markets. “As I talk to my companies, they feel better about the
demand cycle than the investment community and the macro data
points do.”

For a graphic on manufacturing earnings, click on
http://link.reuters.com/ned78m

United Tech, the world’s biggest maker of elevators and air
conditioners, posted better-than-expected quarterly profit and
revenue and it raised its 2010 profit target for the second
time this year. It expects full-year profit of $4.60 to $4.70
per share, representing growth of 12 percent to 14 percent.
[ID:nN21208855]

The Hartford, Connecticut-based company, which also makes
Pratt & Whitney jet engines and Sikorsky helicopters, for the
first time since 2008 reported quarterly organic revenue
growth, a measure that factors out the effect of currency
fluctuations and acquisitions.

Providence, Rhode Island-based Textron, the world’s biggest
maker of corporate jets, also posted results that beat Wall
Street’s forecasts.

Textron, which also makes Bell helicopters and EZ-Go golf
carts, looks for full-year profit of 55 cents to 65 cents per
share. At the high end, that range represents growth from last
year, suggesting the company could return to profit growth
sooner than new CEO Scott Donnelly’s target of 2011.
[ID:nN21127152]

UNCERTAINTY REMAINS

Donnelly, a former GE official who became Textron’s CEO in
December, acknowledged demand for big-ticket items, including
Cessna jets, wavered late in the quarter in the wake of
Greece’s sovereign debt crisis.

“The pace of the recovery remains uncertain with the
European sovereign debt concerns, which have negatively
impacted business and consumer confidence,” Donnelly said on a
conference call with analysts.

Profit growth at Textron’s helicopter, military and
industrial units offset a slide at Cessna.

Growth outside the United States has been a key boost for
major manufacturers this year and the greatest risk many face
is the possibility of slowing demand in Asia, which has been
robust.

Eaton CEO Alexander Cutler cited that concern, although he
expressed confidence the Cleveland-based maker of hydraulic and
electrical systems would manage its way through it.

Eaton raised its profit forecast sharply, looking for
earnings of $4.90 to $5.10 per share, above its earlier
forecast of $4.30 to $4.60 per share. It also said it would
raise its quarterly dividend. [ID:nN21127613]

“While the debt problems in Europe are likely to slow the
rate of growth in some European markets, and the rate of
economic growth in China has moderated slightly, we anticipate
solid global growth continuing during the second half of the
year,” Cutler said. [ID:nN21172839]

Still, the fact that these companies grew profits at a
better-than-expected pace — and expect to continue to do so —
suggests the risks are manageable for businesses that have just
survived the worst downturn in the world economy since the
Great Depression of the 1930s, investors said.

“You have a mind-set and sentiment that is very negative,
so the negative sentiment is telling you that things are bad
because you see them with your eyes and yet the companies are
telling you that they’re not horrible,” said Peter Klein,
senior portfolio manager at Fifth Third Asset Management in
Cleveland, Ohio, which holds United Tech shares. “Eventually,
sentiment is going to have to take that into account and have a
little hope.”

The top executive of U.S. staffing company Manpower Inc
(MAN.N: ), which generates the bulk of its profits in Europe,
said he believed investors exaggerated the risks the Greek debt
crisis posed to the rest of the world.

“The notion of the euro blowing up? No, the stuff isn’t
happening,” Manpower CEO Jeff Joerres said in an interview. “Is
(growth) going to be robust? Not necessarily, but Armageddon is
not on the horizon here.” [ID:nN21136802]

Investors will get a further look at where the
manufacturing sector is heading later this week, when companies
including Caterpillar Inc (CAT.N: ) and 3M Co (MMM.N: ) report
quarterly results.

Textron shares rose 8 percent to $19.48 and Eaton rose 6
percent to $73.08, while United Tech shares were up less than 1
percent at $67.86 on the New York Stock Exchange.

The industrial sector has moderately outperformed the
broader market this year, with the Standard & Poor’s capital
goods industry group (.GSPIC: ) notching a rise of 0.75 percent
at a time the broad S&P 500 (.SPX: ) is down 3.9 percent.

Stock Market Money
(Reporting by Scott Malone; editing by Derek Caney and Andre
Grenon)

WRAPUP 2-U.S. manufacturers’ view rosier as demand returns